Amazon or Meta: Both Hyperscaler Stocks Are Reasonably Priced, but Only One Is a Buy, Says Investor

Amazon (NASDAQ:AMZN) and Meta Platforms (NASDAQ:META) are both spending enormous sums to win the artificial intelligence race, but investors are...

Amazon is projected to pour roughly $200 billion into AI infrastructure this year, dwarfing Meta's estimated $60–70 billion spend, according to analyst estimates cited by Markets Insider. That gulf reflects two distinct bets: Amazon is selling picks and shovels through AWS, which already controls about 31% of the cloud market and is expanding custom silicon like Trainium chips to handle AI workloads cheaper than Nvidia-powered systems. Meta, by contrast, is funding its own AI research and the Llama model family, hoping to dominate consumer-facing applications and advertising tools. One prominent investor argues this makes Amazon's revenue model more durable, since every AI startup that rents compute power on AWS essentially subsidizes Amazon's stock.

If you rent anything from AWS, run a side project on its servers, or rely on a startup that does, those costs are quietly dropping as Amazon's custom chips undercut Nvidia pricing, which means cheaper cloud storage and SaaS tools for small businesses in the coming quarters.

The last time a tech giant spent this aggressively on infrastructure before a product cycle, it was Amazon building fulfillment centers from 2017 to 2020, a move that sent operating margins from 2.8% to 6.1% and turned AWS into a $100 billion annual business. Wall Street tolerated the capital expenditure both times because the spending directly monetized rather than chased speculative consumer adoption. Meta's Llama models remain free and open-source, meaning the company is collecting no direct revenue from its AI flagship even as rivals like OpenAI command billion-dollar enterprise contracts.

Watch Amazon's Q3 earnings report, expected in late October, for the first hard data on whether AWS growth is reaccelerating after a flat 2024. The counterintuitive wrinkle: Meta's stock trades at a lower forward price-to-earnings multiple than Amazon's despite having the smaller AI bill, which means the market has already priced in skepticism about Meta's spending and left Amazon with less room to disappoint.