Buy META Stock Over Amazon?

Question: Why buy Amazon stock (NASDAQ: AMZN) at 38 times earnings when Meta stock (NASDAQ: META) trades at a lower multiple of 29? You likely wouldn’t, especially after considering these straightforward points:

1. Growth: Meta’s revenue is expanding far more quickly than Amazon’s. Over the last twelve months, Meta’s revenue has grown by over 19%, nearly double Amazon’s growth rate of around 10%, highlighting a faster pace of expansion at Meta.
2. Margins: Meta’s profit margins of over 42% are well above Amazon’s operating margin of around 11%. In practice, a larger share of every new revenue dollar at Meta converts to profit, suggesting superior shareholder value potential from its growth.
3. Financial Position: Meta’s balance sheet is stronger, reflecting more conservative leverage and greater liquidity. Meta’s debt-to-equity ratio is 2.7%, versus Amazon’s 5.5%, indicating less reliance on debt. Meta also carries a higher cash-to-assets ratio of 25.1% compared to Amazon’s 13.7%, implying more liquid resources relative to total assets.

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META Is Uniquely Positioned to Capitalize on the AI Revolution

Meta Platforms presents a compelling opportunity for investors bullish on long-term AI adoption, regardless of tariff dynamics. Its edge stems from a dual role: it both builds advanced AI and deploys it immediately across an ecosystem that reaches billions of users. Rather than stopping at R&D, Meta rapidly applies these tools to improve ads, personalize content, and lift engagement—accelerating monetization. With heavy investment in AI research and a unique platform for instant rollout, Meta is positioned to capture the benefits of future AI advances. Related – Meta Platforms: Doubling Down On AI And Advertising.

In the second quarter of 2025, Meta reported strong results that reflected its focus on efficiency and AI-driven execution. Revenue exceeded expectations, led by resilient advertising, as ongoing improvements in targeting and measurement—powered by Meta’s AI stack—continued to pay off.

Moreover, the company’s net margins improved meaningfully. Disciplined cost control and operating leverage from scaling AI infrastructure helped drive higher profitability alongside robust top-line growth, underscoring the payoff from its AI investments.

Potential Risks to Consider

• A key risk is a potential slowdown in revenue growth. In a softer economy, advertisers may trim budgets—Meta’s primary revenue stream—pressuring near-term growth. Macro headwinds, including downturns and elevated interest rates, can also make growth stocks less appealing relative to steadier fixed-income assets.
• AI competition is intensifying, which could challenge Meta’s technological lead. The rise of lower-cost AI offerings raises the question of whether large-scale infrastructure spending will sustain its edge. Regulatory scrutiny—especially across Europe and Asia—remains another overhang that could constrain data monetization and weigh on the business model.
• META is not immune to market sell-offs and has shown significant volatility. During the 2022 inflation shock, shares fell by over 75%, and they dropped about 35% in 2020 amid pandemic uncertainty. These episodes underscore that META is not a “safe” asset and is highly sensitive to market-wide stress.

Despite these risks, for long-term investors with a 3–5 year horizon who can tolerate volatility, Meta at current levels may still offer an appealing entry into the expanding AI theme. To navigate drawdowns, consider tools such as the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices), or work with an advisor experienced in bear markets. Significant wealth often accrues to investors who stay calm and strategic during periods of volatility.