In 1996, Warren Buffett wrote, “Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily understandable business whose earnings are virtually certain to be materially higher five, ten, and twenty years from now.” Put differently, when a stock with compelling growth prospects trades at a sensible price, the result is a no-brainer investment.
Amazon(NASDAQ: AMZN) and Meta Platforms(NASDAQ: META) satisfy those conditions. Indeed, JPMorgan Chase analysts selected both stocks as top picks for 2025. And investors can buy a share of each company for less than $1,000. Here’s why Amazon and Meta Platforms are smart long-term investments.
Amazon has a strong presence in e-commerce, adtech, and cloud computing. It operates the largest online marketplace outside China, is the third-largest digital advertiser, and runs the largest public cloud in terms of sales. Few companies (if any) provide investors with better exposure to so many major secular trends.
Importantly, Brian Nowak at Morgan Stanley recently chose Amazon as a top stock pick for 2025, calling the company an underappreciated leader in artificial intelligence (AI) across cloud computing and retail. Indeed, the company uses machine learning to optimize product recommendations, inventory allocation, and logistics. It also employs generative AI behind the scenes to assist programmers and customer service agents.
Meanwhile, Amazon Web Services (AWS) is monetizing AI across every layer of its cloud platform: hardware, software, and services. Its custom AI chips for training (Trainium) and inference (Inferentia) provide cheaper alternatives to Nvidia‘s graphics processing units (GPUs). Its Amazon Q software automates coding and business intelligence workflows. And its Bedrock service lets clients develop generative AI applications.
Amazon will report fourth-quarter financial results on Thursday, Feb. 6. Wall Street anticipates earnings will grow 49%, followed by 21% growth in 2025. That makes the current valuation of 50 times adjusted earnings look reasonable. But Amazon topped the consensus earnings estimate by an average of 39% in the last six quarters, and that pattern could continue as investments in AI boost revenue and operating efficiency. That makes Amazon a no-brainer buy.
Meta Platforms owns four of the seven most popular social media platforms on the planet, an important competitive advantage that lets it collect data and target advertising content. Consequently, Meta Platforms is the second-largest adtech company in the world behind Alphabet‘s Google, and it’s projected to gain share through 2026, according to eMarketer.
Meta has invested heavily in artificial intelligence hardware and software, and on the fourth-quarter earnings call, CEO Mark Zuckerberg discussed the payoff. The company is saving money by using custom MTIA (Meta Training and Inference Accelerator) chips to handle ad recommendation inference workloads. Eventually, it plans to use its custom silicon for training workloads as well.
Additionally, Meta AI had about 600 million monthly active users in December, making it the most popular conversational assistant in the world. Zuckerberg expects its user base to surpass 1 billion in 2025. “Once a service reaches that kind of scale, it usually develops a durable long-term advantage,” he told analysts. Zuckerberg also expects the open-source Llama models to become “the most advanced and widely used AI models” in 2025.
CFO Susan Li says Meta’s capital expenditures may reach $65 billion in 2025, up 66% from $39 billion in 2024. That spending will be “driven by investments to support both generative AI efforts and our core business,” she told analysts. That’s good news for Nvidia in the wake of the DeepSeek disruption but also good news for Meta. Portfolio manager Dan Niles recently told CNBC that Meta is using AI better than other “Magnificent Seven” companies.
Wall Street expects Meta’s earnings to increase by 6% in 2025. That consensus makes the current valuation of 29 times earnings look expensive, but I expect analysts will revise their estimates higher throughout the year. I say that because digital ad spending is forecast to increase 11% in 2025, and Meta beat the consensus estimate by an average of 13% in the last six quarters. Upward revisions to earnings estimates tend to drive price appreciation, which makes Meta a no-brainer buy.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, JPMorgan Chase, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
2 No-Brainer AI Stocks to Buy With $1,000 in February 2025 was originally published by The Motley Fool
