AI Stocks: Amazon and Meta Rise on JPMorgan Picks

Amazon (AMZN) and Meta (META) gained 2.5% to 3% premarket after JPMorgan named them top AI stocks, citing AWS cloud growth and AI-driven advertising revenue.

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What Did JPMorgan Say About Amazon and Meta?

JPMorgan named Amazon and Meta its top AI-linked internet picks, with a different driver behind each. For Meta, the bank pointed to continued strong revenue growth from AI-driven improvements in ad retrieval, ranking and targeting, which lift advertiser conversions. It said Meta's relative advertising strength is more evident than ever.

For Amazon, the case rests on Amazon Web Services. The company now expects AWS revenue growth above 40% in both 2027 and 2028. It also expects AWS to reach $1 trillion in revenue within five to ten years, with improving payback on capital spending. JPMorgan said it remains Overweight on Alphabet (GOOGL) but sees stronger near-term earnings momentum at Meta following third-quarter results. Alphabet was removed from the focus list.

Why Did Amazon and Meta Shares Jump?

Shares rose because the call tied heavy AI investment to measurable revenue growth at both companies. Meta's third-quarter advertising revenue increased 26% from a year earlier. North American growth accelerated to 33%. The increase added roughly $13 billion in incremental ad revenue, about twice what Google Search added over the same period. JPMorgan projects Meta's ad revenue will exceed Google Search in the fourth quarter of 2026 and beyond.

AWS grew 39% year over year in the third quarter. Management's forecast for growth above 40% in 2027 and 2028 implies that cloud expansion is still accelerating at a very large revenue base.

The reaction was broad. After the open, Meta traded near $640 and Amazon near $270. Alphabet gained about 3% even after losing its focus-list spot. Google Search revenue growth slowed to 12% in the third quarter. The company also reported negative free cash flow for a second straight quarter because of AI infrastructure outlays.

How Does This Fit the Broader Market Backdrop?

The rally came as US equities began the week on a firm footing after a losing week. Last week, the Nasdaq Composite slipped into correction territory, down more than 10% from its peak. Concerns centered on whether record spending on data centers, chips and power will earn adequate returns.

That question separates the companies on JPMorgan's list from the rest of the group. Amazon and Meta have both shown revenue lines that grow alongside their capital spending. Alphabet's slower search growth and negative free cash flow show the strain a heavy build-out can place on cash generation. The market is increasingly rewarding evidence of payback over the scale of the spending.

Strategic Context: Cloud Versus Advertising

The two companies monetize AI through different channels. Amazon sells compute, storage and model access to enterprise customers through AWS, so its returns depend on sustained corporate demand and on capacity coming online fast enough. Meta applies AI internally to its recommendation and ad systems, so returns show up in advertiser spending and pricing across its apps.

Each model has a distinct risk. Cloud growth requires continued heavy capital outlays and carries depreciation costs that weigh on margins. Advertising gains depend on the health of the global ad market and on regulatory conditions around data and targeting. The focus-list placement signals confidence that, for now, both are converting spending into growth.

What Comes Next for AI Stocks?

Near-term direction will depend on whether the opening gains hold and on how the Nasdaq behaves after its correction. The fourth-quarter results will test the forecasts behind the call. Investors will look for AWS growth moving toward the 40% mark, continued double-digit ad growth at Meta, and capital spending that does not outpace revenue. Any change in the pace of AI investment by the largest cloud providers would affect the whole group, including chipmakers and data-center suppliers.

Outlook

JPMorgan's decision to elevate Amazon and Meta lifted both stocks by 2.5% to 3% before the open and roughly 5% after it. The reasoning is straightforward: AWS growth is forecast above 40% through 2028, and Meta's AI-enhanced advertising is widening its lead in digital ad growth. Alphabet remains a major AI player but faces slower search growth and tighter cash flow. With the Nasdaq only just recovering from a correction, results over the next two quarters will determine whether the rebound in AI stocks has staying power.