Assessing Investment Opportunities: Amazon vs. Home Depot
Uncertainty looms in the stock market as investors reevaluate their portfolios. With U.S. President Donald Trump’s ongoing tariffs and rising recession predictions from economists, many are approaching their stock selections with heightened caution.
Two leading consumer goods companies, Amazon (NASDAQ: AMZN) and Home Depot (NYSE: HD), often emerge in these discussions. Which of these stocks represents the better buying opportunity today? Let’s delve into the current situations of both companies.
Where should you invest $1,000 currently? Our analysts have identified the 10 best stocks to purchase now. Learn More »
Image source: Amazon.
Amazon’s Resilience in Challenging Times
Amazon’s North American e-commerce sector is its primary revenue generator, producing $115.6 billion in Q4 sales last year. Investors may justifiably worry about the impact of tariffs and economic downturns on Amazon’s performance.
Historical trends, however, suggest that Amazon has weathered past downturns effectively. In the early phases of the COVID-19 pandemic, the company experienced a 22% revenue increase. Similarly, significant sales growth of 29% occurred during the 2008 financial crisis.
While past performance does not guarantee future results, it highlights Amazon’s ability to thrive amid uncertainty. This resilience is partly due to its diverse revenue streams.
Although e-commerce primarily drives sales, Amazon Web Services (AWS) stands out as a significant growth driver. Holding a dominant share of the cloud computing market at 30%, AWS outpaces competitors like Microsoft and Alphabet. This leadership position comes at a time when cloud sales are anticipated to surge.
Goldman Sachs projects that global cloud sales could hit $2 trillion by 2030, propelled by artificial intelligence (AI). Amazon’s strategic investment of $14 billion in AI leader Anthropic positions it well to capitalize on this anticipated demand.
Given its stronghold in both cloud computing and e-commerce, Amazon’s long-term outlook appears promising. Although stock prices may see short-term volatility, the company’s core business segments remain robust.
Home Depot Faces Challenges
Home Depot recently announced its fourth-quarter earnings, which surpassed market expectations. Sales reached $39.7 billion, exceeding the consensus estimate of $39.1 billion. Earnings per share stood at $3.02, just ahead of analyst predictions of $3.01.
Despite a strong quarter, Home Depot’s future growth prospects raise concerns. The management forecasts a mere 2.8% sales increase for 2025, alongside an anticipated 2% decline in adjusted earnings per share compared to the previous year.
Challenges such as high mortgage interest rates, inflated home prices, and looming tariffs could hinder Home Depot’s growth. Recent data indicates some recovery among homebuyers, yet an economic downturn could reverse this trend. Potential tariffs from President Trump’s administration may prompt consumers to reduce spending on home improvements.
Current consumer sentiment shows a decline in optimism compared to last year, causing inflation concerns to resurface. A significant reduction in consumer spending would likely impact Home Depot’s performance.
While Home Depot’s stock may still be a viable long-term investment, the uncertainties surrounding tariffs, inflation, and consumer confidence present potential hurdles in the upcoming quarters.
Choosing Amazon as the Superior Investment
When comparing the two, Amazon’s solid footing in cloud computing and e-commerce currently makes it the superior investment choice. Though I am optimistic about Home Depot’s future, Amazon’s diverse business operations and involvement in emerging trends like AI set it apart.
It’s crucial to remember that with ongoing economic assessments, both stocks are likely to experience volatility for the foreseeable future.
Should You Invest $1,000 in Amazon Now?
Before making an investment in Amazon stock, consider this:
The Motley Fool Stock Advisor team has identified their current 10 best stocks for investment, and Amazon is not among them. The selected stocks hold promising prospects for substantial future returns.
Consider that when Nvidia was recommended on April 15, 2005, a $1,000 investment would now be worth $676,774!
Stock Advisor offers a straightforward plan for investors, featuring portfolio guidance, regular updates, and two new stock picks each month. The service has outperformed the S&P 500 more than fourfold since 2002. Stay informed with the latest top 10 list by joining Stock Advisor.
*Stock Advisor returns as of April 1, 2025
Suzanne Frey, an executive at Alphabet, serves on the board of directors for The Motley Fool. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, also serves on the board. Chris Neiger does not hold positions in any of the mentioned stocks. The Motley Fool has investments in and recommends Alphabet, Amazon, Goldman Sachs Group, Home Depot, and Microsoft. The Motley Fool recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool adheres to a disclosure policy.
The views and opinions expressed herein are the opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
