Amazon and Meta shares climbed sharply on Monday, driven by fresh analyst support and a revised outlook that Big Tech's artificial intelligence spending cycle may peak sooner than previously expected. Amazon gained as much as 3.7%, while Meta surged over 5.2% after JPMorgan added the social media giant to its Analyst Focus list, replacing Alphabet.
JPMorgan analyst Doug Anmuth highlighted accelerating momentum at Amazon Web Services, which reported third-quarter revenue growth of 39.3% year over year, its fastest pace in nearly five years. AWS ended the quarter with a contracted backlog of $578 billion, growing at a triple-digit annual rate. The bank's commentary was viewed as a buying opportunity. JPMorgan also cited Meta's AI-driven advertising strength after the company posted $64.6 billion in third-quarter revenue, up 26% year over year, with adjusted EPS of $7.40 beating expectations. North American advertising revenue rose 33%.
Dan Ives of Yorkville Ives & Co. moved forward his forecast for the peak growth rate of Big Tech capital expenditure to 2027 from 2028 or 2029. He expects total capex to still exceed $1 trillion in 2027, but free cash flow at Amazon, Microsoft, Alphabet and Meta should trough in the first half of 2027 before recovering. Ives also said 10% to 15% of planned US data centre capacity could be delayed or abandoned due to power and infrastructure constraints, and maintained a $300 price target on Amazon.
Morgan Stanley analysts noted that major AI hyperscalers including Meta, Alphabet, Amazon, Microsoft and SpaceX are well positioned to adapt to data-centre construction changes following the US midterm elections. They said slower infrastructure development could increase the importance of compute efficiency in 2027, potentially benefiting companies investing in their own AI models. Amazon also began rolling out a text-based Alexa for Shopping to select US customers on November 6, expanding its consumer AI ambitions.
