Microsoft or Amazon? We Asked ChatGPT-4 Which Magnificent 7 Stock Is a Better Buy for 2024

In the world of large-cap tech giants, the “Magnificent Seven” have become a key driver of major stock indices like the S&P 500 and Nasdaq 100.

This group, recognized in 2023 for exceptional market achievements, consists of: Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), Nvidia (NASDAQ: NVDA), Alphabet (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), Meta (NASDAQ: META) and Tesla (NASDAQ: TSLA).

Among them, Amazon and Microsoft stand out primarily for their leadership in cloud computing and artificial intelligence (AI), constantly pushing the boundaries of technological innovation.

As investors struggle to understand the intricacies of the technology sector, Finbold turned to OpenAI’s newest and most advanced artificial intelligence (AI) platform, ChatGPT-4o, to dig into the fundamentals of Amazon and Microsoft to determine which stocks offer potential buying opportunities.

Key Growth Drivers for Amazon (NASDAQ: AMZN)

Amazon’s growth is driven by its diversified business model, which includes e-commerce, cloud computing and advertising.

A significant driver is Amazon Web Services (AWS), which continues to be a leader in the cloud computing sector. AWS’s integration of generative AI technology is expected to further enhance its performance, making it a significant growth engine for the company.

Another significant growth driver is Amazon’s advertising business, which is a high-margin segment.

With the online advertising market expected to grow significantly in the coming years, Amazon is well-positioned to capitalize on this trend.

In the latest quarter, Amazon saw AWS sales rise 19% to $26.3 billion, topping analysts’ forecasts. But overall net sales rose 10% to $148 billion, slightly below analysts’ estimates of $148.6 billion.

The AWS unit, a key driver of Amazon profits, saw its margins fall 2 percentage points to 36%. That was partly due to a 50% increase in real estate and equipment investments, to $17.6 billion.

In addition, Amazon’s projected operating income for Q3 2024 is in the range of $11.5 billion to $15 billion, which is lower than analysts’ expectations of $15.1 billion. This indicates potential pressure on profitability from high capital expenditures.

Amazon, on the other hand, faces significant challenges, including geopolitical risks and intense competition. Its reliance on cross-border e-commerce, particularly with China, exposes it to potential growth effects from trade restrictions.

Moreover, intense competition from other e-commerce giants and cloud service providers could impact the company’s market share and growth trajectory.

Key Growth Drivers for Microsoft (NASDAQ: MSFT)

Microsoft’s growth is being fueled by its strong presence in AI and cloud computing. The company’s Azure platform continues to gain market share, serving a significant portion of the global market, including 85% of the Fortune 500.

OpenAI’s ChatGPT integration with Azure expands AI capabilities, putting Microsoft at the forefront of AI innovation.

In the gaming industry, Microsoft now has more than 500 million monthly active users across consoles, PCs and mobile devices, following its acquisition of Activision Blizzard in October.

Financially, Microsoft reported strong earnings, with fiscal year 2024 ending with revenue of $245.1 billion and net income of $88.1 billion.

Despite recent market reactions to somewhat lower-than-expected growth in some AI segments, Microsoft’s overall financial health remains solid, supported by stable cash flow generation and a diverse product offering.

ChatGPT- 4o investment perspectives

ChatGPT-4o suggests that Microsoft stock will be a better buy in 2024 for risk-averse investors looking for stable income and diversified exposure to technology.

The company’s leadership in AI, reinforced by its strategic partnership with OpenAI and the expansion of Copilot, ensures its continued growth.

Microsoft’s solid financial performance, including strong cash flow and a diverse product portfolio, provides a compelling case for long-term investment.

While Amazon shows significant growth potential, especially in high-margin segments like AWS and advertising, Microsoft’s strategic positioning and consistent financial performance offer a more stable and promising investment opportunity for the rest of 2024.

In summary, Microsoft is overall a better option for most investors, offering a combination of growth and stability with lower risk compared to Amazon.

This makes Microsoft a more logical choice for long-term investments, especially for those who value consistent profits and good financial health.

Diversifying your investments between both assets can also be a smart strategy to limit risk and leverage the strengths of each company.

Reservation: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.