Founded in 1993, The Motley Fool is a financial services company with the mission to make the world smarter, happier, and richer. Through premium investing solutions, free guidance and market analysis on Fool. com, top-rated podcasts, and its non-profit The Motley Fool Foundation, The Motley Fool reaches millions of people worldwide. JPMorgan analyst Doug Anmuth identifies resilient consumer spending and the increasing demand for artificial intelligence (AI) as advantageous factors for Amazon and Alphabet. As a market leader in cloud infrastructure and platform services, Amazon is well-positioned to benefit from businesses investing in AI. Alphabet's strong presence in digital advertising and cloud computing, coupled with recent AI innovations, allows the company to potentially maintain or increase its market share. It is important to note that the opinions expressed in this free article may differ from The Motley Fool's Premium Investing Services. To access top analyst recommendations, in-depth research, and other investing resources, consider becoming a Motley Fool member. In 2020, the S&P 500 experienced a 24% increase, largely driven by better-than-expected economic growth and excitement surrounding AI. JPMorgan Chase, a prominent player in investment banking revenue, believes these tailwinds will continue to drive certain stocks higher in the coming year. Investors are likely to prioritize solid growth, proven profitability, and reasonable valuations to mitigate the risk of a recession. Within this framework, JPMorgan has chosen Amazon and Alphabet as its top picks for 2024. The investment bank stands behind these recommendations, as evidenced by its significant investment of nearly $40 billion in Amazon and Alphabet, representing 4. 4% of its portfolio as of September. JPMorgan analyst Doug Anmuth emphasizes revenue acceleration and margin expansion as key factors propelling Amazon to the top-picks list. These predictions are supported by resilient consumer spending, optimized logistics costs, and increasing demand for cloud AI services. With a dominant presence in e-commerce, Amazon operates the world's most popular online marketplace in terms of monthly visitors and the largest online marketplace in North America and Western Europe in terms of sales. The company solidifies its leadership in retail through efficient logistics infrastructure, which minimizes costs and ensures timely delivery for consumers. To optimize costs further, Amazon has adopted a regional fulfillment model. According to CEO Andy Jassy, shorter travel distances and fewer touches result in lower costs and faster shipments.

Amazon Web Services (AWS) leads in cloud infrastructure and platform services and has been recognized as a leader in cloud AI developer services. AWS aims to monetize its expertise with innovative products like Bedrock, CodeWhisperer, and Amazon Q. Analysts project an average annual sales growth rate of 11% for Amazon over the next five years, making its current valuation of approximately 3 times sales reasonable. This presents a favorable opportunity for long-term investors to consider purchasing shares of this growth stock. Doug Anmuth also highlights revenue acceleration and margin expansion as crucial factors leading to Alphabet's inclusion in the top-picks list. The catalysts for these predictions include a rebound in online advertising, cost management efforts, and AI innovation in advertising and cloud computing. Alphabet dominates the digital advertising market with an estimated share of 39%, driven by its ability to engage users on platforms such as Google Search, YouTube, Android, and Chrome. The company's AI research capabilities enhance its advertising ecosystem. The ongoing experiment, Search Generative Experience (SGE), integrates generative AI into Google Search to improve user experiences. Additionally, Alphabet leverages generative AI to assist media buyers in creating campaigns and adapting advertising content to search queries. Advancements in research models and generative AI contribute to better performance, profitability, and user experiences according to Chief Business Officer Philipp Schindler. Despite widening its operating margin by three percentage points over the past year, Alphabet continues to invest in cloud product development and go-to-market capabilities. As a result, Google Cloud Platform's market share in cloud infrastructure and platform services increased from 9% to 11% within a year, positioning it as a competitive option alongside AWS and Microsoft Azure. Alphabet's recent launch of Gemini, a multimodal AI model capable of processing various forms of information, enables customers to create custom generative AI applications, potentially leading to further market share gains. Wall Street predicts Alphabet to achieve an average annual sales growth rate of 10% over the next five years, aligning with the positive outlook for its advertising and cloud computing businesses. The company's current valuation of 6. 7 times sales is justifiable within this context. Investors with a five-year time horizon should take this opportunity to consider purchasing shares of this growth stock.