The world’s leading tech companies have played a unique role during the COVID-19 pandemic. Defensive options are now being considered thanks to their entrenched competitive position and relative immunity to economic downturn thanks to the pandemic.

Over the past two quarters, their earnings have shown that these tech giants have not only been insulated from the global health crisis, but have actually thrived during one of the most pronounced economic recessions in American history.

Although the rally of the past six months has pushed its share prices into overbought territory, the correction that began this month is providing some better entry points for long-term buy-and-hold investors.

Here’s a look at Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ:MSFT), two companies with market capitalizations of more than $ 1 trillion, to understand which stocks are a better buy after the recent slide.

Amazon

The e-commerce giant Amazon.com (NASDAQ:AMZN) proved to be a great gamble during this pandemic. When consumers were forced to stay homebound, they had no choice but to go online to shop.

Amazon’s business model perfectly positioned it to expand its edge in e-commerce, further expanding its sales and reach. Its shares, which initially weakened during the first days of the coronavirus outbreak, spiked thereafter, nearly doubling in value in early September.

That rally, however, is showing some signs of peaking, pushing Amazon shares down 14% from their all-time highs, fueling debate among investors about whether it is the right time to buy or wait on the sidelines. Of course, it is almost impossible to predict the short-term movements of the market, but if you look at Amazon’s business model, it is not difficult to conclude that this company will continue to benefit from the secular shift towards e-commerce.AMZN Weekly TTMAMZN Weekly TTM

One of Amazon’s greatest strengths is its paid subscription program, one of the largest in the world. In exchange for an annual fee, your Prime membership offers free and faster shipping on a number of items. Members also benefit from a catalog of streaming movies, TV series and music, as well as exclusive member offers.

Over time, the program has helped attract customers who once used Amazon to buy books and movies. Today, Prime has more than 150 million paying members.

Although Amazon’s online shopping generates the majority of the Seattle-based company’s revenue, it is not the most profitable segment. Amazon is also the largest provider of cloud infrastructure in the world, with Amazon Web Services generating most of the profits.

Because of this business strength, the top 36 analysts already assign a buy rating to Amazon, according to TipRanks.com. Bernstein, the last major investment firm with a retention rating, updated the stock yesterday, saying it was using the recent pullback to go long after missing the rally from March levels. According to Bernstein:

“COVID has driven secular trends, from e-commerce to digital advertising to the cloud, and Amazon is the top beneficiary in all three income groups.”

The firm also noted that the e-commerce giant has “quietly made major inroads into the grocery and ‘shopping’ sectors,” which should only boost the company’s stock positions as brick-and-mortar stores reopen.

Microsoft

Since March, Microsoft’s stock has delivered an incredible performance. Investors boosted stocks after seeing strong sales growth driven by continued demand for their cloud computing services as customers switched to telecommuting during the coronavirus pandemic.

Sales of Azure, Microsoft’s popular cloud computing service, grew 47% in the second quarter from a year earlier. The segment registered a growth of 59% in the previous period and 64% in the same quarter of the previous year.

As the post-pandemic rally faltered, Microsoft’s stock also lost some ground, falling about 13% from all-time highs this month. Microsoft is likely to continue to decline if the current market correction deepens.Microsoft 1-Year Chart.Microsoft 1-Year Chart.Microsoft 1-Year Chart.

That said, the Washington state-based software giant is one of the safest long-term bets in the tech space. That makes your stocks worth buying when they get cheaper. The reason for this optimism is simple: Microsoft has made all the right moves over the past decade. You are now in the rewarding position of being able to extract rewards from your previous investments.

Following a massive transformation led by Chief Executive Officer Satya Nadella, which began more than five years ago, the company has grown into one of the most powerful sectors in the market in the fast-growing field of cloud computing, with the second largest market share in the segment, surpassed only by Amazon.

Analysts at Morgan Stanley (NYSE:MS) recently reiterated their “overload” rating on Microsoft shares, raising their price target from $ 230 to $ 245. Combined with earnings growth of “13-19”, analysts see Microsoft’s total return profile as “long-lasting and attractive” during these unclear times.

Coupled with 10% revenue growth, further margin expansion and share buybacks, analysts believe equities have a premium return profile “versus the broader market, not yet fully reflected in equities.” .

Add Microsoft’s strong dividend and excellent track record in payments to the attractiveness of stocks and it looks like an even more attractive investment, especially during an uncertain economy.

Since 2004, when the tech giant began paying out dividends, its payout has more than quadrupled. Currently its annual yield is 1.11% with a quarterly payment of $ 0.56 per share, after implementing the 10% dividend increase announced last week.

In conclusion

As investors remain nervous about the global economic outlook on fears about the second wave of coronavirus, any weakness in both Amazon and Microsoft shares should be seen as a buying opportunity. Both companies are among the most resilient tech giants, and well positioned to continue their growth trajectories.

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