The ongoing debate between Apple and Google investors is a fitting introduction for Amazon.com, Inc. (NASDAQ:AMZN), which is hoping to attract business away from its two larger technology brethren. Apple and Google have market capitalizations of $392 and $265 billion respectively, while Amazon is trailing in a distant third place with $115 billion in market value.
Who could have thought that Amazon.com, Inc. (NASDAQ:AMZN) could attack Apple and Google Inc (NASDAQ:GOOG) on their home turf? Research firm NPD group released its Annual Music Study in April. The report revealed that Amazon has gained 22% market share of the digital music downloads market, up from 15% in 2011 and 13% in 2010. In contrast, Apple’s market share has fallen to 63% from a previous 68% during 2011.
On a larger scale, Amazon is competing with Google to become the gateway to the Internet on both mobile devices and desktops. Studies indicate that online consumers may be skipping Google and going directly to Amazon when looking to make an online purchase, causing the search engine giant to lose a click from a paid advertiser.
Despite the positives outlined above for Amazon.com, Inc. (NASDAQ:AMZN), the stock is expensive and showing signs of weakness following recent Q1 2013 earnings. The company has become notorious for it’s varying and unpredictable profitability, and this quarter was no different. First quarter operating margin fell to 1.1% vs. 1.5% a year ago, causing investors to send the stock lower more than 7% on April 26.
Even though Amazon is entrenching on competitors, I recommend that readers stay out of the stock.
Foolish Bottom Line
There’s only one definite conclusion that can be made: the competition between Apple, Amazon, and Google is heating up.
However, not all three Silicon Valley powerhouses are a buying opportunity at the current time. Investors seem to be heavily favoring Google at 24 times earnings, while Apple is earning little respect at a beaten-down 6x multiple. Furthermore, on an anecdotal basis, my own group of friends couldn’t get enough of Apple at $700, but now that the stock has sold off, the average investor is hardly giving it any notice.
If Lebron James can still compete on the basketball court and Roger Federer can still play tennis at Wimbledon, then chances are that Apple will still produce products that captivate and enthrall millions of consumers worldwide.
I recommend that readers take advantage of the market’s short-sightedness in Apple, and wait for a better opportunity with competitors Amazon and Google. Until then, enjoy watching the ensuing battles play out between these tech heavyweights that are all-but-guaranteed to continue.
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The article Apple, Amazon, and Google: The Competition Is Heating Up originally appeared on Fool.com is written by John Macris.
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