Meta vs. Amazon: Which Underperforming "Magnificent Seven" Stock Will Rebound More in 2026?

Key Points

• Amazon has more growth levers and is experiencing meaningful traction for its AI chips and AI agents.

• Meta Platforms is growing faster than Amazon thanks to its online ads and social media dominance.

• Meta stock trades at a more attractive valuation and may offer a better opportunity when considering AI glasses.

• 10 stocks we like better than Meta Platforms ›

The “Magnificent Seven” stocks have been known to outperform the S&P 500 for several years. In fact, the Roundhill Magnificent Seven ETF, a fund that only holds Magnificent Seven stocks, has outperformed major market indexes over the long run.

However, two tech giants on this list of coveted stocks didn’t fare so well this year. Amazon (NASDAQ: AMZN) and Meta Platforms (NASDAQ: META) both performed below their expectations. Neither of them kept up with the S&P 500 despite both of them having strong starts to the year.

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These underperforming stocks look due for bounce-back rallies in 2026, but which stock is more deserving of a spot in investors’ portfolios? These are the key details to consider.

Image source: Getty Images.

Amazon has multiple growth levers

While Meta Platforms makes most of its revenue from online ads, Amazon has more growth opportunities. Amazon’s online marketplace, Amazon Web Services (AWS), online ads, and artificial intelligence (AI) chips are all meaningful business segments.

AWS growth should continue to accelerate thanks to AI tools requiring digital infrastructure. Sales for the segment grew by 20% year over year in Q3, but that wasn’t the only part of the business that was growing.

Advertising revenue jumped by 24% year over year, and its online marketplace also posted a double-digit growth rate. Online ads have boosted Amazon’s profit margins, but its push into AI agents can further increase margins.

Amazon informed investors in its Q3 press release that AI agents have assisted customers across multiple business segments. For instance, AWS AI agent Transform has saved more than 700,000 hours of manual migration effort year to date, which comes to 335 developer years of work. Amazon also told investors that its Quick Suite agent AI app helped businesses save 80% of their time on complex tasks while realizing 90% cost savings.

Amazon’s Trainium2 AI chips are another notable segment that grew by 150% quarter over quarter and is turning Amazon into an AI stock. Trainium2 has become a multibillion-dollar business and can benefit from long-term AI tailwinds.

Meta Platforms is growing faster

Meta Platforms still makes almost all of its revenue from online ads. It’s not as diversified as Amazon, but Facebook’s parent company continues to grow at a faster rate.

The social media giant delivered 26% year-over-year revenue growth in the third quarter, significantly outpacing Amazon’s 13% growth. Furthermore, Meta stock trades at a price-to-earnings ratio of 29.8 compared to Amazon stock’s 32.8. Meta Platforms is growing faster and has a more attractive valuation than Amazon.

Its social networks continue to grow, with daily active users up by 8% year over year, but the real opportunity lies in wearable tech. Meta Platforms aims to be the leader in this industry, and it can make the business less reliant on ad sales.

“We continue to lead the industry in AI glasses. If we deliver even a fraction of the opportunity ahead, then the next few years will be the most exciting period in our history,” CEO Mark Zuckerberg told investors.

The extremely bullish scenario is that AI glasses become the next smartphone. Instead of reaching into your pocket for your device, you can have it accessible at all times, similar to an Iron Man helmet that doesn’t cover your entire face.

If Meta Platforms wins that industry, as it has dominated social media, and AI glasses become mainstream products, the company can bring in billions of additional dollars each quarter. In the meantime, ad revenue continues to generate a healthy cash flow, supporting Meta Platforms’ AI investments.

The verdict

It’s hard to go wrong with either company, but Meta Platforms appears to be the better growth stock. Facebook’s parent company has delivered higher revenue growth rates while offering a lower valuation.

Amazon’s revenue growth can accelerate thanks to AWS, online ads, AI agents, and AI chips, but Meta Platforms’ ads continue to perform at a high level. AI glasses can finally give Meta Platforms the second major product it has been seeking, so it doesn’t depend entirely on ad revenue.

As AI glasses technology improves, it can become the next innovative, must-have tech product. Amazon has more paths to long-term growth, but Meta Platforms continues to thrive, thanks to its old reliable sources, while looking for new revenue streams.

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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Meta Platforms. The Motley Fool has a disclosure policy.