On the second installment of the "Frontier Tech With Gene Munster" podcast, Loup Ventures founder Gene Munster and Benzinga PreMarket Prep co-host Joel Elconin discussed two of the most popular tech stocks in the market.
Alphabet Issues
Alphabet, Inc. GOOGGOOGL doesn’t get as much love from analysts as some of the other big tech stocks, and Munster said it’s likely due to a combination of the company’s complicated business and concerns over potential regulations.
“There’s this sense of an unpredictable part around legislation that will have a profound impact on the business,” he said.
Google will be able to recapture some of its lost advertising revenue growth, Munster said, but it likely won’t be able to get back to the 20% level again.
“Likely the growth rate is going to settle down, call it closer to 15%, and I think that is more or less what the expectations are,” he said.
Amazon Catalysts
Amazon.com, Inc.’s AMZN stock had a difficult time getting above the $1,950-$1,960 level in recent months. Prime Day and the company’s next earnings report could be the catalysts that push Amazon to new highs, but the next true driver for the stock may not come until the end of the year, Munster said.
Editor's note: The 'Frontier Tech' podcast was taped July 2. Amazon traded around $2,001 per share at time of publication.
“You probably need to fast-forward to the end of the year when they report their December quarter. The company is making a significant investment, call it $750 million, to shift from a two-day window to a one-day [delivery] window with Prime.”
That shift is a big deal for shoppers, particularly around the holidays, Munster said — and the transition could help Amazon combat declining growth rates in units sold.
The Whole Foods integration is ahead of schedule, Munster said. Despite the fact that Amazon is losing money by adding and expanding two-hour Whole Foods deliveries, he said the company is not concerned about the near term.
“Amazon has been clear that they think about their business in terms of decades."
In that sense, long-term investors should consider thinking about both Amazon and Alphabet shares from a more long-term perspective as well. In the past five years, Alphabet shares are up 58%, while Amazon shares are up 166% overall.
Listen to the full interview in the clip below:
Photo courtesy of Amazon.
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