Google, Amazon top picks at Needham for 2024 on ad spending, AI
Dec. 22, 2023 9:55 AM ET
By: Christiana Sciaudone, SA News Editor
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Google (NASDAQ: GOOG) (NASDAQ: GOOGL) and Amazon (NASDAQ: AMZN) are Needham’s top two picks among big tech companies for 2024.
Increases in ad spending and generative artificial intelligence are the key themes, analysts Laura Martin and Dan Medina wrote in a note.
Google is favored due to expectations of a rebound in auto, film and travel ad spending — as well as political ad spending — and because the tech giant said it will finally begin to deprecate cookies in Chrome, which may disrupt ad spending across the rest of the digital advertising landscape.
Amazon is the second-highest ranked pick with generative AI advantages, margin expansion and free cash flow growth and a strategic pivot away from being a consumer-facing company (which has regulatory risks) and into becoming an indispensable business-to-business backbone company for logistics and cloud.
Generative AI has been a big theme already for 2023 and as the technology evolves, many analysts see huge opportunity ahead of various kinds. Tech stocks have rallied this year, as the Nasdaq has gained more than 40%. Google and Amazon have done even better, gaining more than 59% and 79% year-to-date, respectively.
In the longer-term, Needham likes cloud companies Amazon, Google and Microsoft ( MSFT) as they house the most important large language models, which represent the next generation of innovation platforms. (The bank believes that Apple ( AAPL) has the largest present innovation platform.)
The bank raised its price targets for Amazon to $175 from $160, and for Apple to $220 from $195.
Google is up 0.8% on Friday while Amazon is up fractionally. |
