Amazon and Alphabet AI stocks are bouncing back after a rough first half of 2024.
The first half saw AI stocks tank as President Trump’s import tariff plans spooked investors. They worried tariffs would hike prices, squeeze consumers, and slam growth companies. The S&P 500, Dow, and Nasdaq dipped in April.
Now, things are shifting. Trade deals with the U.K. and China and tech giants doubling down on capital spending sparked renewed investor confidence. Two top AI players are set to soar in the second half of 2024. 
Amazon (AMZN) was flat the first half, with stock barely moving. Investors feared tariffs would hit e-commerce purchases and AWS spend. But Amazon’s wide sourcing keeps it flexible. AWS customers are still spending big on AI.
Amazon overhauled costs during inflation spikes before, bouncing back from losses. That should help now if tariffs hit costs again. AWS is expected to benefit from the ongoing AI cloud buildout.
The stock trades at 35 times forward earnings, down from over 40 times late last year, making it ripe for a rally.
AMZN Net Income (Annual) data by YCharts
Alphabet (GOOG, GOOGL) slipped over 6% H1 but surged 20% off April lows. The rebound looks set to continue with growth stocks regaining favor.
Alphabet’s ad business and Google Cloud drive billions in revenue. Their own large language model powers better search and targeted ads, keeping advertisers spending.
Google Cloud revenue jumped 28% last quarter to $12 billion, mostly on AI services. The cloud unit is fueling big growth as AI adoption ramps up.
Alphabet trades cheap at 18 times forward earnings, setting up a strong second half.
Both stocks are key AI winners to watch as sentiment improves despite tariff uncertainties.
John Mackey, former Whole Foods CEO, and Suzanne Frey, Alphabet exec, sit on The Motley Fool’s board. The Motley Fool holds shares in both companies.
