By Christine Ji
The pressure is on for Big Tech companies to deliver a return on their AI investments, making Amazon and Meta the top trades for 2026, according to Bernstein
Continued revenue reacceleration for Amazon Web Services and cost efficiencies from robots could lead Amazon shares to surge in 2026.
As the artificial-intelligence trade heats up, the search for tangible returns on investment continues. That could lead to a shakeup of the &#34;Magnificent Seven&#34; leaderboard, with Amazon.com and Meta Platforms stealing the spotlight.
Although AI models greatly improved in performance in 2025, &#34;investor patience is running quite thin for yet another capital-intensive training cycle&#34; absent accompanying adoption and monetization from key AI players, Bernstein's Mark Shmulik wrote in a Monday note.
Similarly, in a JPMorgan survey of buy-side investors published Sunday, respondents flagged &#34;return on AI investments&#34; as a primary driver of internet sector performance this year.
In Shmulik's opinion, Amazon (AMZN) and Meta (META) are the two best-positioned Big Tech names for this year.
In 2026, Shmulik expects Amazon to firmly overturn the &#34;last-place&#34; narrative surrounding Amazon Web Services, as the cloud-computing business could see revenue growth kick into a new gear. The stock's lukewarm performance in 2025 - the worst in the group of megacap tech stocks known as the Magnificent Seven - was largely due to investor concerns about whether Amazon's cloud business would be able to capture incremental AI dollars.
Shmulik anticipates that AWS will maintain over 20% revenue growth for 2026 and 2027, with a bull case of over 25% growth.
Additionally, Amazon is utilizing AI in the physical realm with over 1 million robots in its supply chain, a trend that Shmulik believes will drive margin expansion. He gives the stock a $300 price target.
The JPMorgan survey found that 46% of respondents expect Amazon to be the best-performing Magnificent Seven stock in 2026, the highest share of any company. Furthermore, 54% of respondents named Amazon the &#34;best turnaround story&#34; among last year's underperformers.
Now read: Amazon and these four tech stocks can benefit most from the next AI wave, according to Bank of America
Shmulik called Meta a &#34;dark horse&#34; and the &#34;most compelling [Magnificent Seven] catch up trade for 2026.&#34; Although shares of Meta rose 13% in 2025, beating out Amazon's 5% gain, they still lagged the S&amp;P 500's SPX return of 16%.
He noted that even if Meta's AI models lag behind the top players on certain benchmarks, the company is unmatched at using AI to drive engagement and revenue generation.
That's due to Meta's expertise in digital advertising, as the company has enhanced its ad targeting and conversions with AI. From 2021 to 2025, engagement across all of Meta's platforms has grown 8% annually, with growth on Instagram especially high at 15%.
Meta has also been able to turn engagement into monetization. Shmulik points to Meta's &#34;Advantage+&#34; ad tools, which are already generating $60 billion in annual recurring revenue. Its Meta AI assistant, which now boasts over 1 billion monthly active users, could also help the company increase its incremental search advertising.
Shmulik gives Meta's stock a $870 price target, writing that it has &#34;the highest upside potential in our coverage, though this upside comes with notable risk.&#34; His target is 33% above current levels.
Shares of Meta have been weighed down by investor concerns about overspending, but Shmulik believes capital intensity as a percentage of revenue could peak in 2026 across the industry, boosting return on invested capital. Meta will need to demonstrate to investors that it can grow earnings and free cash flow going forward to justify the heavy spending from last year.
Also read: After Meta's AI spending spree, is it time for another 'year of efficiency'?
-Christine Ji
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(END) Dow Jones Newswires
01-12-26 0931ET

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Amazon and Meta are highlighted as top trades for 2026, according to Bernstein. Amazon is expected to see significant revenue growth from its cloud business, AWS, and is utilizing AI in its supply chain, with a price target of $300. Meanwhile, Meta is recognized for its strong digital advertising capabilities, with a price target of $870, despite concerns over spending. Both companies are positioned to capitalize on the AI investment landscape, with Amazon anticipated to be the best-performing stock in the 'Magnificent Seven' group.

- Bernstein identifies Amazon and Meta as the top trades for 2026, driven by expectations of strong returns from AI investments.  
- Amazon is projected to see significant revenue growth from its cloud services and efficiency gains from robotics, while Meta leverages AI to enhance digital advertising engagement and monetization.  
- Both companies face pressures to deliver results, with Amazon's stock forecasted at $300 and Meta's at $870, reflecting their anticipated performance in a competitive market.

Why Amazon and Meta could be standout stocks in the 'Magnificent Seven' this year