Buy META Stock Over Amazon?

Group 1: Investment Comparison - Amazon stock trades at 38 times earnings, while Meta stock trades at a lower multiple of 29, raising questions about the valuation difference [2] - The High Quality Portfolio has outperformed its benchmark, delivering returns exceeding 91% since inception, suggesting an alternative investment strategy [2] Group 2: Meta's AI Positioning - Meta is uniquely positioned to capitalize on the AI revolution by building and deploying advanced AI across its ecosystem, enhancing ad performance and user engagement [3] - The company reported strong second-quarter results in 2025, with revenue exceeding expectations due to resilient advertising and improvements from its AI stack [4] Group 3: Financial Performance - Meta's revenue has grown over 19% in the last twelve months, nearly double Amazon's growth rate of around 10%, indicating faster expansion [6] - Meta's profit margins exceed 42%, significantly higher than Amazon's operating margin of around 11%, suggesting better shareholder value potential [6] - Meta's balance sheet shows a debt-to-equity ratio of 2.7% compared to Amazon's 5.5%, indicating less reliance on debt and a higher cash-to-assets ratio of 25.1% versus Amazon's 13.7% [6] Group 4: Long-term Investment Considerations - For long-term investors with a 3–5 year horizon, Meta may offer an appealing entry into the expanding AI theme despite potential volatility [7] - Tools like the Trefis Reinforced Value (RV) Portfolio have outperformed all-cap benchmarks, suggesting strategic investment options during market volatility [7] Group 5: Risks and Challenges - Potential revenue growth slowdown due to economic conditions could pressure Meta's primary revenue stream from advertising [8] - Intensifying AI competition and regulatory scrutiny, particularly in Europe and Asia, pose challenges to Meta's technological lead and data monetization [8] - Meta has shown significant volatility, with shares falling over 75% during the 2022 inflation shock and about 35% in 2020 amid pandemic uncertainty, indicating sensitivity to market-wide stress [8]