Why Amazon and Meta Are Bernstein's Top 2026 Large-Cap Tech Picks Amid AI and Earnings Momentum

The Magnificent 7-Meta, Amazon, Apple, Microsoft, Alphabet, NVIDIA, and Tesla-have long dominated the tech sector, but 2026 is shaping up to be a pivotal year for two of its most transformative members: Amazon and Meta. Bernstein analysts have positioned these stocks as their top large-cap technology picks for 2026, citing a compelling mix of AI-driven innovation, earnings reacceleration, and strategic repositioning in a rapidly evolving landscape. This analysis unpacks why Amazon and Meta, despite underperforming in 2025, are now poised for a rebound-and why investors should consider positioning now.

The 2025 Setbacks: AI Overinvestment and Operational Hurdles

Both Amazon and Meta faced significant headwinds in 2025 as they grappled with the costs of AI integration and organizational restructuring. Amazon announced the elimination of 14,000 corporate roles, with AI cited as a key driver of efficiency-driven layoffs. While internal sources clarified that AI was not the sole factor, the move underscored the company's shift toward automation and cost discipline. Meanwhile, Meta cut 600 AI-related jobs, framing the reductions as a response to bloated operations and inefficiencies in its AI initiatives. These moves, while necessary for long-term agility, contributed to short-term volatility and investor skepticism.

Meta's Q3 2025 earnings report further highlighted the challenges. A one-time $15.93 billion tax charge-linked to the "One Big Beautiful Bill Act"-reduced net income to $2.71 billion, despite record revenue of $51.24 billion. The company's Reality Labs division reported a $3.7 billion operating loss, raising concerns about the profitability of its metaverse and AI investments. Amazon, too, struggled with margin compression in 2025, as $125 billion in AI infrastructure spending weighed on free cash flow.

The 2026 Rebound: AI-Driven Earnings Momentum

The tide is turning in 2026. For Amazon, the reacceleration of Amazon Web Services (AWS) growth is a key catalyst. Bernstein analyst Mark Shmulik anticipates AWS revenue growth of over 20% in 2026, with a bull case for 25%. This momentum is fueled by Amazon's proprietary Trainium3 AI chips, which offer a 40% price-performance advantage over competitors, reducing reliance on NVIDIA and boosting cloud profitability. Additionally, AI-driven robotics in Amazon's supply chain are projected to save $10 billion annually, enhancing margins and operational efficiency.

Meta's turnaround is equally compelling. The company's AI monetization tools, such as Advantage+, are already generating $60 billion in annual recurring revenue. Its AI assistant, now with over one billion monthly active users, is expected to drive incremental search advertising revenue. Bernstein analysts have labeled Meta a "dark horse" in 2026, citing its strong ad business and strategic focus on AI-driven user engagement. WarrenAI further supports this narrative, noting Meta's 26% year-over-year revenue growth in Q3 2025 and its $14.3 billion investment in Scale AI.

Strategic Positioning in the Magnificent 7 Landscape

Both companies are redefining their roles within the Magnificent 7. Amazon's expansion into satellite internet via "Amazon Leo" positions it to compete with SpaceX's Starlink, opening new revenue streams in underserved markets. Meanwhile, Meta's pivot to "personal superintelligence"-a vision articulated by CEO Mark Zuckerberg-highlights its ambition to dominate AI-powered consumer experiences. These moves reflect a broader industry shift toward AI-driven infrastructure and services, where the Magnificent 7 are not just participants but architects.

WarrenAI's analysis reinforces this trend. Amazon's inclusion in Warren Buffett's Berkshire Hathaway portfolio-despite Buffett's historical skepticism about AI-signals confidence in its long-term value. Similarly, Meta's aggressive capital expenditures (projected at $70–72 billion in 2025) underscore its commitment to AI and cloud infrastructure, even as it navigates near-term profitability challenges.

Analyst Consensus and Investment Case

Bernstein's price targets-$300 for Amazon and $870 for Meta-reflect a bullish outlook. For Amazon, the firm cites its expanding retail margins, agentic AI shopping innovations and AWS's competitive edge in AI inference costs. Meta's higher-risk profile is offset by its strong ad business and potential for AI-driven user growth. WarrenAI aligns with this view, emphasizing Amazon's 20% AWS growth in Q3 2025 and Meta's ability to leverage AI for advertising revenue.

Investors should also consider the broader market dynamics. The "30% Rule"-where AI automates 30% of tasks while amplifying the rest-is reshaping productivity metrics across the Magnificent 7. Amazon and Meta's ability to balance efficiency with innovation positions them to outperform peers in 2026.

Conclusion: Positioning for 2026

Amazon and Meta's 2025 struggles were inevitable in a sector defined by rapid technological disruption. However, their 2026 trajectories-driven by AI monetization, earnings reacceleration, and strategic repositioning-make them standout picks in the Magnificent 7. Bernstein and WarrenAI's endorsements, combined with concrete metrics like AWS growth and Advantage+ revenue, provide a robust foundation for investor confidence. For those seeking exposure to the next phase of the AI revolution, positioning now could yield significant returns as these tech giants reclaim their momentum.