Stock market today: S&P 500 drops for fifth day as focus shifts to Powell’s speech
Investing.com - Morgan Stanley (NYSE:MS) has reaffirmed its Overweight ratings on Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOGL), and Amazon (NASDAQ:AMZN), citing evidence that their massive capital expenditure increases are generating solid returns. Amazon, now valued at $2.4 trillion, has seen 21 analysts revise their earnings expectations upward for the upcoming period, according to InvestingPro data.
The investment bank notes that while combined annual capital spending for the three tech giants has surged approximately 4x from pre-pandemic levels, their return on invested capital (ROIC) has improved by "several hundred basis points" on average. The firms’ ROICs now average about 37%, up from 30% in the 2018-2020 period and 34% during 2021-2023. Amazon’s current ROIC stands at 15%, with InvestingPro analysis showing the company maintains a GOOD Financial Health Score of 2.99 out of 5.
Morgan Stanley highlights that these tech companies’ ROICs compare favorably to the broader market average of approximately 10% (or 18% excluding financials), suggesting the heavy investments are justified. The bank specifically identified Meta as its "top pick" among the three companies.
Revenue growth forecasts for these companies have also improved, with analysts now expecting about 14% year-over-year growth in 2025, which is 3% higher than expectations from early 2023. The bank notes that Meta’s 2026 revenue outlook has improved by nearly 8% during this period. Amazon has already demonstrated strong momentum, achieving 10.87% revenue growth over the last twelve months. For deeper insights into Amazon’s growth metrics and detailed financial analysis, investors can access the comprehensive Pro Research Report available on InvestingPro.
Management commentary from recent earnings calls supports this analysis, with Amazon CEO Andy Jassy noting AWS faces "more demand than we have capacity" and Meta CFO Susan Li citing "very compelling returns from our AI capacity investments" in the company’s core advertising business.
In other recent news, Amazon has announced the launch of same-day perishable grocery delivery in over 1,000 U.S. cities, aiming to expand to more than 2,300 cities by the end of 2025. Prime members can enjoy free delivery on orders over $25, while non-Prime members face a $12.99 fee. This strategic move has prompted Telsey Advisory Group to reiterate its Outperform rating and a $265 price target, emphasizing the company’s strengthened position against competitors like Walmart (NYSE:WMT) and Target (NYSE:TGT). Additionally, Evercore ISI maintained its Outperform rating with a $280 price target, highlighting the integration of groceries into Amazon’s Prime ecosystem as a way to boost customer engagement.
Amazon’s Project Kuiper, which involves satellite launches, is also gaining attention. Cantor Fitzgerald reiterated an Overweight rating and a $280 price target, noting the project’s momentum with 102 satellites now in low Earth orbit. The company plans to launch commercial beta service later this year or in early 2026. The expansion into groceries and satellite initiatives underscores Amazon’s strategic efforts to enhance its market presence and customer offerings.
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