We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Amazon vs. Meta: Which AI Stock Enjoys an Edge Right Now?
Read MoreHide Full Article
Key Takeaways
Amazon's AWS, AI and chips businesses each show strong growth, with AI and chips above $25B run rates.
Meta's AI strengthens ads, but rising expenses, legal risks and enterprise efforts add uncertainty.
Amazon expects $197-$202B in Q3 sales, while Meta projects $61-$64B as both boost AI spending.
Amazon (AMZN - Free Report) and Meta Platforms (META - Free Report) are two of the largest technology companies reshaping their businesses around artificial intelligence (AI). While Amazon monetizes AI through Amazon Web Services (AWS), custom chips and agentic shopping, Meta embeds AI across its family of apps to boost engagement and advertising performance.
Both companies are pouring capital into AI infrastructure in 2026, making the return on these investments a key focus for investors. Recent product launches and updated guidance make the comparison timely.
Let's delve deeper and closely compare the fundamentals of the two stocks to determine which one is a better investment now.
The Case for AMZN
Amazon's AI strategy spans the full stack, from custom silicon and infrastructure to models and applications. AWS revenues grew 37% year over year in the second quarter, its fastest pace in 18 quarters, reaching a $169 billion annualized run rate. AWS' AI business and Amazon's chips business each surpassed a $25 billion annual revenue run rate, growing at triple-digit percentages. Anthropic and OpenAI have made multi-year, multi-gigawatt Trainium commitments, while Amazon Bedrock customers spent more in the second quarter than in all prior quarters combined.
AI is also strengthening Amazon's retail and advertising businesses. Alexa for Shopping active users nearly doubled, while advertising revenues grew 26% in the second quarter. Ads Agent expanded to 11 new countries this year, lowering costs for advertisers.
Recent announcements reinforce this momentum. In August 2026, AWS agreed to acquire DuckLabs, the company behind DuckDB, to make analytics faster and more cost-effective. In September, the Amazon Quick desktop app became generally available. Kiro was offered free to millions of students for a year and AWS became the first cloud provider approved for NATO RESTRICTED workloads across all member nations.
For the third quarter of 2026, Amazon expects net sales of $197-$202 billion, up 9-12%, with growth nearly 400 basis points higher excluding Prime Day timing. Operating income is projected in the range of $22.5-$26.5 billion, up from $17.4 billion in the year-ago quarter. However, AI spending remains heavy, with 2026 capital expenditures expected near $220 billion, while trailing 12-month free cash flow turned into a $7.6 billion outflow.
The Zacks Consensus Estimate for AMZN’s 2026 earnings is pegged at $13.01 per share, indicating an 81.45% increase from the figure reported in the year-ago quarter.
Meta's AI investments are strengthening its core advertising engine, backed by 3.6 billion daily users across its family of apps. Large language models now power content ranking and ad recommendations, while AI-powered Advantage+ solutions reached an annual revenue run rate of more than $75 billion. Since Meta AI was rebuilt around Muse Spark, the number of people interacting with the assistant daily has increased 60%, and more than 1 million businesses use Meta Business Agents weekly.
Meta has also broadened its AI product slate. In September 2026, it introduced Muse, a personal AI agent, unveiled the Meta One subscription service with more AI features and announced Petal, a petabit-capacity transoceanic subsea cable. At Connect, it showcased Meta VR Glasses and Ray-Ban Meta Audio, its first audio glasses.
Management expects third-quarter 2026 revenues of $61-$64 billion and still anticipates 2026 operating income above the 2025 level. However, the cost burden is rising. Meta expects 2026 total expenses of $165-$169 billion, including $2.4 billion in legal charges, and capital expenditures of $130-$145 billion.
Its tax rate outlook for the remaining quarters was raised to 15-17%. Management flagged youth-related trials in the United States that may result in a material loss, although Meta's August 2026 agreement with bipartisan attorneys general to support teens signals efforts to address this scrutiny. The emerging enterprise opportunity, spanning its model API, business agents and potential compute sales, is promising but requires capabilities Meta is still building, while management has not yet provided a 2027 capital expenditure outlook.
The Zacks Consensus Estimate for third-quarter 2026 earnings is pegged at $6.39 per share, down 3.3% over the past 30 days, suggesting an 11.86% decline from the figure reported in the year-ago quarter.
Both AMZN and META trade at premium valuations. AMZN trades at a forward 12-month price/earnings (P/E) ratio of 22.28X, while META has a 20.17X multiple. AMZN's premium appears justified by its diversified AI revenue streams across cloud, custom chips, advertising and retail, whereas META's heavy spending and legal overhang warrant waiting for a better entry point for the stock.
AMZN vs. META: P/E F12M Ratio
Image Source: Zacks Investment Research
On price performance, AMZN shares have returned 8% over the year-to-date period, while META shares have returned 12.7%. Despite the relative underperformance, investors should track AMZN as accelerating AWS growth and rising AI and chips run rates signal stronger long-term upside.
AMZN Underperforms META Year to Date
Image Source: Zacks Investment Research
Conclusion
Both Amazon and Meta are investing heavily in infrastructure to capitalize on AI, but Amazon holds a clear edge. Its full-stack AI portfolio, spanning AWS, Bedrock and Trainium, has pushed both its AI and chips businesses past $25 billion in annual revenue run rate, while AI also lifts retail and advertising. Meta's AI-driven ad gains are notable, but rising expenses, legal uncertainties and a still-developing enterprise business temper its near-term investment appeal.
Given AMZN's stronger growth visibility and justified premium, investors should track the stock for its better upside potential, while holding META and waiting for a better entry point. AMZN and META have a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Amazon vs. Meta: Which AI Stock Enjoys an Edge Right Now?
Key Takeaways
Amazon (AMZN - Free Report) and Meta Platforms (META - Free Report) are two of the largest technology companies reshaping their businesses around artificial intelligence (AI). While Amazon monetizes AI through Amazon Web Services (AWS), custom chips and agentic shopping, Meta embeds AI across its family of apps to boost engagement and advertising performance.
Both companies are pouring capital into AI infrastructure in 2026, making the return on these investments a key focus for investors. Recent product launches and updated guidance make the comparison timely.
Let's delve deeper and closely compare the fundamentals of the two stocks to determine which one is a better investment now.
The Case for AMZN
Amazon's AI strategy spans the full stack, from custom silicon and infrastructure to models and applications. AWS revenues grew 37% year over year in the second quarter, its fastest pace in 18 quarters, reaching a $169 billion annualized run rate. AWS' AI business and Amazon's chips business each surpassed a $25 billion annual revenue run rate, growing at triple-digit percentages. Anthropic and OpenAI have made multi-year, multi-gigawatt Trainium commitments, while Amazon Bedrock customers spent more in the second quarter than in all prior quarters combined.
AI is also strengthening Amazon's retail and advertising businesses. Alexa for Shopping active users nearly doubled, while advertising revenues grew 26% in the second quarter. Ads Agent expanded to 11 new countries this year, lowering costs for advertisers.
Recent announcements reinforce this momentum. In August 2026, AWS agreed to acquire DuckLabs, the company behind DuckDB, to make analytics faster and more cost-effective. In September, the Amazon Quick desktop app became generally available. Kiro was offered free to millions of students for a year and AWS became the first cloud provider approved for NATO RESTRICTED workloads across all member nations.
For the third quarter of 2026, Amazon expects net sales of $197-$202 billion, up 9-12%, with growth nearly 400 basis points higher excluding Prime Day timing. Operating income is projected in the range of $22.5-$26.5 billion, up from $17.4 billion in the year-ago quarter. However, AI spending remains heavy, with 2026 capital expenditures expected near $220 billion, while trailing 12-month free cash flow turned into a $7.6 billion outflow.
The Zacks Consensus Estimate for AMZN’s 2026 earnings is pegged at $13.01 per share, indicating an 81.45% increase from the figure reported in the year-ago quarter.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote
The Case for META
Meta's AI investments are strengthening its core advertising engine, backed by 3.6 billion daily users across its family of apps. Large language models now power content ranking and ad recommendations, while AI-powered Advantage+ solutions reached an annual revenue run rate of more than $75 billion. Since Meta AI was rebuilt around Muse Spark, the number of people interacting with the assistant daily has increased 60%, and more than 1 million businesses use Meta Business Agents weekly.
Meta has also broadened its AI product slate. In September 2026, it introduced Muse, a personal AI agent, unveiled the Meta One subscription service with more AI features and announced Petal, a petabit-capacity transoceanic subsea cable. At Connect, it showcased Meta VR Glasses and Ray-Ban Meta Audio, its first audio glasses.
Management expects third-quarter 2026 revenues of $61-$64 billion and still anticipates 2026 operating income above the 2025 level. However, the cost burden is rising. Meta expects 2026 total expenses of $165-$169 billion, including $2.4 billion in legal charges, and capital expenditures of $130-$145 billion.
Its tax rate outlook for the remaining quarters was raised to 15-17%. Management flagged youth-related trials in the United States that may result in a material loss, although Meta's August 2026 agreement with bipartisan attorneys general to support teens signals efforts to address this scrutiny. The emerging enterprise opportunity, spanning its model API, business agents and potential compute sales, is promising but requires capabilities Meta is still building, while management has not yet provided a 2027 capital expenditure outlook.
The Zacks Consensus Estimate for third-quarter 2026 earnings is pegged at $6.39 per share, down 3.3% over the past 30 days, suggesting an 11.86% decline from the figure reported in the year-ago quarter.
Meta Platforms, Inc. Price and Consensus
Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote
Valuation and Price Performance Comparison
Both AMZN and META trade at premium valuations. AMZN trades at a forward 12-month price/earnings (P/E) ratio of 22.28X, while META has a 20.17X multiple. AMZN's premium appears justified by its diversified AI revenue streams across cloud, custom chips, advertising and retail, whereas META's heavy spending and legal overhang warrant waiting for a better entry point for the stock.
AMZN vs. META: P/E F12M Ratio
Image Source: Zacks Investment Research
On price performance, AMZN shares have returned 8% over the year-to-date period, while META shares have returned 12.7%. Despite the relative underperformance, investors should track AMZN as accelerating AWS growth and rising AI and chips run rates signal stronger long-term upside.
AMZN Underperforms META Year to Date
Image Source: Zacks Investment Research
Conclusion
Both Amazon and Meta are investing heavily in infrastructure to capitalize on AI, but Amazon holds a clear edge. Its full-stack AI portfolio, spanning AWS, Bedrock and Trainium, has pushed both its AI and chips businesses past $25 billion in annual revenue run rate, while AI also lifts retail and advertising. Meta's AI-driven ad gains are notable, but rising expenses, legal uncertainties and a still-developing enterprise business temper its near-term investment appeal.
Given AMZN's stronger growth visibility and justified premium, investors should track the stock for its better upside potential, while holding META and waiting for a better entry point. AMZN and META have a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.