Why Amazon and Meta are the Best Stocks to Buy in 2026
The market in early 2026 has been characterized by volatility, as investors weigh concerns over inflation, oil prices, and geopolitical conflict against the rapid acceleration of artificial intelligence. While some skeptics question the massive capital expenditures (capex) of Big Tech, a closer look at the data reveals that Amazon and Meta are currently mispriced opportunities with incredible upside.
1. Amazon: The Vertical Integration Powerhouse
Amazon is far more than an e commerce giant; it is becoming a vertically integrated AI and silicon leader. CEO Andy Jassy’s 2025 shareholder letter laid out a clear vision for an aggressive $200 billion capex plan in 2026, primarily to support the overwhelming demand for AWS and AI infrastructure.
I want to share some of the highlights from that letter with you.
The Chip Revolution: Amazon’s custom silicon business inclusive of Graviton, Trainium, and Nitro now has an annual revenue run rate exceeding $20 billion, growing at triple digit percentages.
Stand-alone Potential: If it were a standalone company, its run rate would be closer to $50 billion, making it larger than AMD was in 2023.
Unserved Demand: AWS is not “building it and hoping they come.” It is monetizing capacity as fast as it is installed, with a 24% year over year growth rate as of Q4 2025.
High Interest: Demand is so high that two large customers recently asked to buy 100% of all Graviton capacity for 2026.
Predictable Returns: While the $200 billion spend will depress free cash flow in the short term, Jassy notes these investments are backed by firm customer commitments, such as OpenAI’s $100 billion+ agreement.
New Revenue Streams: Amazon Pharmacy is expanding its reach, recently launching Eli Lilly’s weight loss pill, Foundayo, with same day delivery available in nearly 3,000 cities.
Price Target: Based on high teens earnings growth and recovering cash flows, Amazon is estimated to reach approximately $600 per share by early 2031, representing a 19% CAGR from current levels.
2. Meta: The New King of Advertising
Meta has undergone a massive transformation, moving from a social media company under fire to an AI driven advertising juggernaut. Despite ongoing legal challenges regarding platform addictiveness, Meta’s fundamentals are stronger than ever.
Dethroning Google: For the first time, Meta is projected to surpass Google in net digital ad revenue, reaching $243.46 billion in 2026.
Reels Success: This is driven by the success of AI recommended content like Reels, which recently saw a 30% watch time boost in the US.
Massive Scale: With 3.58 billion daily active users, nearly half the planet uses a Meta product every single day.
Meta AI: This distribution gives Meta an unbeatable advantage in rolling out its Meta AI assistant, which is already a top 10 app in the App Store.
Valuation Play: Meta offers a rare combination of fast growth and low valuation. Even with heavy capex, Meta’s earnings growth remains robust.
Efficiency Gains: A strategic partnership with Arm is helping Meta optimize its AI workloads, reducing energy consumption and increasing compute efficiency across its data centers.
The Big Picture: 2026 and Beyond
The global AI data center market is projected to grow from $147 billion in 2025 to over $810 billion by 2033. Amazon and Meta are primary architects of this infrastructure. While short sighted investors may fret over “depressed” free cash flow today, the reality is that these companies are building the “electricity” of the 21st century. For those with a five year horizon, the current “shaky” start to 2026 provides a perfect entry point into two of the most resilient compounding machines in history.
