AMZN vs. META: Which Magnificent Seven Stock Is Better ...
The Magnificent Seven stocks have been driving the bulk of the S&P 500’s gains in recent years. In this evaluation, we compared two of the Magnificent Seven stocks - Amazon (NASDAQ:AMZN) and Meta Platforms (NASDAQ:META) using TipRanks’ Comparison Tool to determine which stock is better.
Amazon Overview:
Amazon, a giant in e-commerce and cloud computing, has seen a 15% year-to-date increase in its stock and a 69% growth over the last year. With a P/E ratio of 50.9x, Amazon is trading at a discount to its five-year mean P/E ratio of 72.2x. Analysts are optimistic about Amazon's future earnings potential, especially after the strong performance of its cloud computing segment, Amazon Web Services (AWS).
For the first quarter, Amazon reported adjusted earnings of 98 cents per share on $143.3 billion in revenue, surpassing consensus estimates. The company's management provided a positive outlook for the second quarter, despite a slight miss on revenue estimates. With a Strong Buy consensus rating and an average stock price target implying upside potential of 18.65%, Amazon appears to be undervalued.
Meta Platforms Overview:
Meta Platforms, the parent company of social networks like Facebook and Instagram, has seen a 22% year-to-date increase in its stock and an 80% growth over the last year. With a current P/E ratio of about 25.1x, Meta Platforms is trading in line with its five-year mean P/E ratio. The company's forward P/E suggests a stable earnings outlook with a focus on AI investments.
Meta Platforms reported adjusted earnings of $4.71 per share on $36.45 billion in revenue for the latest quarter, exceeding consensus estimates. However, investors reacted negatively to the company's increased capital expenditure guidance, especially in support of its AI roadmap. The Reality Labs division continues to report losses, raising concerns about Meta's ability to monetize new technologies.
With a Strong Buy consensus rating and an average stock price target implying upside potential of 20.2%, Meta Platforms remains an attractive investment option.
Conclusion:
While both Amazon and Meta Platforms are part of the Magnificent Seven stocks, Amazon emerges as the better choice due to its attractive valuation, successful AI implementation, and strong performance in cloud computing. On the other hand, Meta Platforms' AI ambitions are still a work in progress, with concerns about converting investments into profits. Investors should consider these factors when evaluating their investment decisions.
