Investor's Guide To Inflation + 2 Buy Now Stocks

Inflation means prices for stuff and services going up. It's measured with something called the Consumer Price Index (CPI). The Bureau of Labor Statistics updates it every month.

For ten years, the CPI stayed around 2%. But in mid-2022, it jumped to 9.1%, the highest in 40 years. This was due to pandemic-related stimulus and low interest rates. A little inflation is good because it encourages people to spend and helps wages grow.

If prices go up too much, people might not have enough money to buy things they need. To prevent this, the Federal Reserve increased interest rates a lot in the past year. This has helped bring prices down - they haven't gone up for 10 months in a row.

Two companies suffered due to high inflation. They could be good choices as inflation decreases.

Amazon is a big retailer that looks after people's money. Online sales in 2021 were $220 billion. That is lower than last year. The first quarter of 2023 was the same as last year. Inflation and interest rates should stop going up. If they do, sales will improve. Investors can buy cheap Amazon stock now. It is 40% less than its all-time high.

The company has other businesses that are growing well. Amazon Web Services is a cloud computing platform that makes a lot of money. It's better than any of its competitors. It offers simple data storage and advanced AI tools. It grew 16% in the first quarter, but it's been slowing down. It's responsible for all of the company's profit.

Amazon has a big advertising business that's growing fast. It made 20% more money in Q1. Amazon has lots of digital things like Prime streaming, Twitch streaming, and Amazon Music. People go to Amazon.com 2.2 billion times a month. This lets merchants show their stuff to a lot of people.

Amazon is getting more good stuff like NFL's Thursday Night Football. This could make them lots of money from ads. Ads and e-commerce should grow faster as the economy gets better. This will make businesses want to spend more money on ads.

If you want to make a smart long-term investment, buy Amazon stock. Right now, it's trading at a much lower price than before. This is a good opportunity to invest. Amazon is going to become even stronger in the tech industry, which means more benefits for shareholders.

I said before that if the economy improves, ads will be doing better. Meta Platforms has had a tough time lately because most of the money they earn comes from businesses advertising on Facebook, Instagram, and WhatsApp. In fact, their revenue went down in the last three quarters of 2022.

In Q1 2023, Meta's sales grew again. The reason for this isn't necessarily improved conditions. It's because they're making big progress with new tools like artificial intelligence. This helps them to optimize their ads for customers. AI is getting better at picking content that's relevant to specific users. Meta improved ad efficiency by 30% on Instagram's Reels and 40% on Facebook. These are important gains because Reels was launched in 2020 to take on TikTok. TikTok dominates the short-form video market.

AI algorithms now show about 20% of everything seen by users on Instagram and Facebook. Instagram saw a 24% rise in Q1 because of this. This trend will probably help advertising revenue grow.

Meta got criticized by investors in 2022 for their spending on their metaverse virtual reality project. The project caused loss of $13.7 billion while only bringing in $2.1 billion of revenue. CEO Mark Zuckerberg has promised to do better in 2023 and has already cut 21,000 jobs since November 2021. They will be managing their expenses more carefully.

Meta's new version has made investors happy, and the stock rose 87% in 2023. If the economy gets better, the company's growth may increase, and investors can still buy shares now.

Randi Zuckerberg used to work for Facebook and is now a part of The Motley Fool's board of directors. John Mackey was once the CEO of Whole Foods Market, which is owned by Amazon, and is also on The Motley Fool's board of directors. Anthony Di Pizio has no opinion on the stocks mentioned in the article. The Motley Fool recommends and has stakes in Amazon.com and Meta Platforms. They always keep an open and honest disclosure policy.