Citi says Amazon and Alphabet are 'top picks' following fall events — and we do, too

Published Thu, Sep 29 20224:57 PM EDTUpdated Thu, Sep 29 20225:10 PM EDT

Two of our core tech holdings hosted annual launches this week, revealing ample room for business growth. Amazon (AMZN) unveiled a series of new and updated smart home devices. In a separate event, Alphabet 's (GOOGL) Google announced new features to enhance its search engine and improve user experience. Following these events, in separate research notes, Citi praised the mega caps for being two of the best positioned companies in the internet sector. As shareholders of both, we agree. Here's an in-depth look at these two fall events along with Wall Street's take and ours, too. Amazon's hardware event Amazon hosted its annual September hardware event on Wednesday, showcasing new gadgets as part of its interconnected smart home ecosystem driven by Alexa A voice assistant capabilities, including new Echo devices, a Ring Spotlight Cam Pro, new Fire TVs and an actual television. Other new devices were a Halo Rise sleep tracker and the Kindle Scribe that allows users to write on it. Amazon first launched Echo with the Alexa voice assistant in 2014, a smart home product that quickly allowed the company to settle into its position as a leader in the $113 billion smart home market . Fast forward to today and there are more than 140,000 home products that are compatible with Alexa, with customers connecting hundreds of millions of smart home devices to the popular cloud-based voice service. In a research note, Citi said Amazon's new products push the company closer to its home-connected vision. A particular standout for analysts was Amazon's smart TV line with the Omni QLED series, which aligns particularly well with accessing Amazon's Prime Video, an "acquisition" and "retention" tool in their view. As of its second-quarter, Amazon said it has over 1 million registered developers, brands, and device makers building with Alexa. Google's 'Search On 2022' event Alphabet's Google talked about its vision for improving search during the annual "Search On" event on Wednesday. They introduced new search experiences to better reflect how people find information. Here were the highlights. Google introduced multisearch, a feature which allows people to search using images and text simultaneously. Lens is another feature by which users can search using their smartphone cameras. Updates to Google Maps will help users understand their surroundings better. Users can now see information about the environmental impact of their choices. "Search On" also unveiled how Google's search engine is making it easier to explore and shop for products. This showed Citi that Alphabet has "a long runway for growth," as Google's search engine remains the "core starting point of the web," analysts wrote in a research note. Citi sees Google's evolution of its search engine, which now allows people to use their cameras to search for products, as improving the user experience and leading to monetization opportunities. Google's search segment is already a top money maker for the internet giant, delivering $40.69 billion in second-quarter revenue , a 13.5% year-on-year increase. Bottom line We are long-term holders of Amazon. The new hardware event strengthens their ecosystem of interconnected home products. Wednesday's event, coupled with this week's announcement of a second Prime Day , will help Amazon get a jump on the holiday season rush. We think Amazon's ability to continually develop new devices with advanced features and different functionalities, allows it to maintain durable demand for its products and services. For people who just joined the club, "Amazon is the Big Cap you want to buy," Jim Cramer said during Thursday's daily meeting for Club members. Earlier this week, we bought 75 shares of Amazon following last week's sell off, which pushed the market further into oversold territory. Google's enhanced search features mean people will continue to default to its search engine. We like to see that the company is ahead of the curve when it comes to envisioning how users interact with technology. Overall, these events aren't reasons alone to buy here and now. Though both Amazon and Alphabet are rated as 1s in our portfolio, meaning we see them as buys at current levels. For investors looking at these stocks and wondering which companies can survive this downturn, keep innovating and investing in growth and are most likely to lead us into the next evolution of computing, Amazon and Google are showing us they can. (Jim Cramer's Charitable Trust is long AMZN and GOOGL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Lennar is teaming up with Amazon to offer smart homes.

Source: Lennar