The past few weeks have brought market turmoil of historical proportions, but investors in Amazon and Netflix are reaping notable gains.
The two names are top performers among large-cap tech stocks year to date, and both have outperformed the Nasdaq index as well. Netflix (NFLX) - Get Report and Amazon (AMZN) - Get Report have gained 26% and 20%, respectively, this year compared to a loss of 7% in the broader tech-heavy index.
The two haven't just weathered the economic storms so far -- they've prospered in the stay-at-home era.
With consumers ordering delivery en masse, Amazon appears well-positioned to capture lasting gains from the current glut of online ordering. The company is hiring 175,000 new workers to manage rising demand, in addition to other measures.
But its cloud businesses is also poised to benefit in the "stay at home" era, pointed out Morgan Stanley analyst Brian Nowak in a note last month. Amazon's AWS powers Netflix and other consumer applications that are seeing increased usage right now.
Amazon closed at an all-time high at $2,286.21 on Tuesday, putting its market cap at $1.14 trillion.
As for Netflix, it's no surprise that the homebound masses are turning to more entertainment -- and Netflix bulls believe the company will emerge from the "stay at home" movement stronger than ever.
"[One] of the lasting cultural impacts of the Covid-19 crisis will be to accelerate the adoption of streaming video, and further ingrain it into the culture," wrote Bernstein analyst Todd Juenger in a recent note, also raising his target price for Netflix to $487 from $423 per share.
On Tuesday, Netflix shares rose 4.2% to a record closing high of $413.55.
"We expect the near-term benefits include some combination of reduced churn, increased gross adds, and higher average revenue per user (tradeups to plans allowing more concurrent streams)," Juenger said.
Juenger noted, however, that Netflix could see a negative impact from production stoppages, and that it was difficult to get a handle on the overall financial outlook given the uncertainty of the pandemic.
Other analysts point to Netflix's value proposition as evidence that it will continue to perform well even in a recession.
"NFLX should also outperform in a recession, given its low price point and sticky subscriber model," added Bank of America analyst Anthony Cassamassino in a recent note.