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Mega-Cap Tech Stocks: An AI Growth Opportunity with AMZN and META In-Depth Analysis of Mega-Cap Tech Stocks for AI Growth



The Nasdaq soared up to new altitudes during early trading on Friday, marking the commencement of a crucial fortnight for Wall Street. In the forthcoming week, Alphabet, Microsoft, Apple, Amazon, alongside other mega-cap technology behemoths, will divulge their financial results. Subsequently, the financial market will be closely eyeing the presidential election that is slated for November 5.



The bulls maintained their position at Nasdaq’s 21-day moving average, a stance repeated numerous times throughout this year. Tesla experienced a significant surge in its stock post an earnings announcement earlier in the week, while Taiwan Semiconductors recently showcased the enduring strength in artificial intelligence (AI) expenditure.



Discover more insights about the advancing stock market in the latest episode of Full Court Finance at Zacks, delving into the impending technology sector earnings and the impending presidential election.

Delving into Meta Platforms for AI Growth Potential



Meta Platforms, Inc. (META) gears up to unveil its Q3 2024 earnings outcomes on October 30. 



Meta Platform’s evolution parallels the perpetual quest to engage consumers with digital advertising in a realm dominated by smartphone enthusiasts. In Q2, Meta extended its daily active users across Facebook, Instagram, and WhatsApp by 7% to reach 3.27 billion, a panorama where ad impressions and prices each swelled by 10%.



Embarking on an AI-oriented future, Meta, under the purview of Mark Zuckerberg, is championing an unconventional trajectory by embracing open-source AI entirely. Wall Street has embraced Meta’s potent amalgamation of AI expansion, fueled by its robust balance sheet and the perpetual enlargement of its core enterprises. An astoundingly high 41 out of 48 brokerage recommendations hail Meta as “Strong Buys.”



Despite registering a splendid 60% surge YTD and a monumental 345% uptick over two years, marking an era where it outstripped the market and the Tech sector, Meta’s shares trade at a 10% markdown relative to the Zacks tech sector and a staggering 70% dip from its zenith, exhibiting a 23.9X forward 12-month earnings ratio.



Projections foresee Meta augmenting its revenue by 20% in 2024, further escalating to 14% the following year, while simultaneously elevating its adjusted earnings by 44% and 13%, respectively. Meta’s enhanced adjusted earnings outlook positions itself at a commendable Zacks Rank #2 (Buy) and also wears the hat of a dividend issuer.

Strategic Insights on Purchasing Amazon Stock for an Impending Breakout



Amazon (AMZN) is slated to disclose its Q3 2024 earnings on October 31.



Over the past decade, Amazon stock has skyrocketed an astounding 1,100%, surpassing the Tech sector’s 333%, Apple’s 770%, and Alphabet’s 500%. Despite such a momentous triumph, Amazon’s 25% YTD ascent significantly trails Meta and other mega-cap technology rivals. AMZN only recorded a 130% surge from its troughs and stumbled in its endeavor to substantially transcend its 2021 pinnacles witnessed back in July.



Amazon currently positions itself 21% under its average Zacks price target, showcasing stabilized support around its 21-week moving average and previous crests. The stock seems poised to potentially breach its recent consolidation phase should it furnish optimistic guidance.

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From a valuation perspective, Amazon trades at a striking 95% beneath its peak and commands over a 50% markdown relative to its 10-year median at 32.9X forward 12-month earnings. If the PEG ratio, encompassing its long-term earnings growth outlook, is scrutinized, AMZN rests at a 25% discount vis-a-vis Tech at 1.2.



Clinching nearly 40% of the total U.S. e-commerce landscape, Amazon outperforms its closest contender, Walmart, by a staggering 33%. Further establishing its dominance, Amazon spearheads the world’s most extensive cloud-computing enterprise, with its digital advertising wing experiencing a notable upsurge.



The prowess of its high-margin AWS and advertising verticals, coupled with a dedication to efficiency, propels Amazon’s earnings advancement. Reports also speculate that Amazon is gearing up to allocate over $100


Amazon to Invest Billions in Data Centers for AI Expansion

The Power of Amazon’s AI Expansion

Amazon is set to inject billions of dollars over the next decade into expanding its data center infrastructure, fortifying its position as a force to be reckoned with in the realm of artificial intelligence. This move underscores Amazon’s unwavering commitment to harnessing the potential of AI and leveraging data to drive innovation and growth.

Financial Growth Projections

The e-commerce giant is on track to soar with projections indicating a 64% increase in adjusted earnings in 2024 and an additional 23% growth the following year. This surge will see Amazon’s earnings per share climb from $2.90 in FY23 to an impressive $5.84 in the subsequent fiscal year. Moreover, the company is forecasted to amplify its sales by 10% in FY24 and an additional 11% in the proceeding year, resulting in an estimated $130 billion surge in total revenue over the span of two years.

Investment in Data Centers

With a strategic focus on reinforcing its AI capabilities, Amazon’s substantial investment in data centers is a nod to the increasingly pivotal role that data plays in shaping the technological landscape. These centers will serve as the bedrock for Amazon’s AI expansion efforts, providing the necessary infrastructure to support and drive innovation in artificial intelligence.

Historical Context and Future Outlook

This significant investment by Amazon harks back to the company’s track record of ushering in transformative technologies that reshape industries and redefine standards. With iconic innovations like Amazon Web Services setting new benchmarks, the colossal investment in data centers underscores the company’s unwavering commitment to pushing boundaries and leading the charge in AI development. This move not only reinforces Amazon’s leadership position but also sets the stage for continued growth and innovation in the future.