The trouble with never is that it is a really long time. But just as the popular investor Warren Buffett claims that he will never sell one share of Coca-Cola, I do not foresee a day where I will ever be selling my shares of Apple or Amazon.
There will be times when taking a little profit might look opportunistic, but for the long-term investor patience will pay off by buying the stock and holding great companies without having to time the markets. Both of these giants are innovators and leaders that make an excellent case to hold forever.
The case for Amazon
For the past two years, Amazon has had its entire-year e-commerce sales grow by around 16.7% and 15%, respectively, increasing to $468 billion in its e-commerce sales during 2021. This was helped along by the pandemic that led to a lot of people staying home and making their purchases online.
Amazon is going through a shift in which its increased margin generator is also most likely to be its lead revenue producer in the future. Amazon Web Services is why Amazon has crushed Q4 operating income estimates, producing operating profit of around $5.3 billion in quarter four, an increase of about 49% for the quarter, and its biggest quarter-over-quarter growth in revenue ever, which resulted in $71 billion for the whole year in 2021.
It should also benefit traders to know that Amazon has recently announced a $10 billion stock buyback strategy, signaling management’s belief that Amazon stock is worth a premium to its price today. And on top of that, it has also announced a stock split, which will give 20 shares of stock for each one share owned.
The case for Apple
Apple’s big historical revenue increase moment came at the release of a revolutionary product — the iPhone. Apple’s worth and its products are only two of the many reasons to purchase Apple stock and never sell it. But like Amazon, Apple’s lead revenue producer of the future might be its services segment encompassing software, Apple Music and services, which has brought in around $68 billion last year. That number has reflected a streak of six consecutive quarters, and 20 of the last 23 seeing sequential quarterly boosts in services revenue.
Services have provided 18% of Apple’s total yearly revenue, which is a distant second place to iPhones at 52% revenue, but since 2015 it is capturing a bigger percentage of that total, as the iPhone segment is indicating a decreasing portion of total. At these rates it is not likely to overtake the iPhone’s total revenue as a percentage any time soon, but an eventual transition to the higher-margin portion as the main revenue producer is on course.
The great news for traders is that iPhone sales are continuing to increase in unit volume, and global market share has also remained steady since Q1 of 2020, culminating in about 22% market share in Q4 of 2021 — its highest rate in the last two years. Along with iPhone revenue will come additional revenue in services like AppleCare. But in years where iPhone sales might drop off, services could continue to see growth as a result of the 1.65 billion actively installed Apple devices.