Zacks Investment Ideas feature highlights: Amazon, Alphabet, Meta Platforms and Microsoft

For Immediate ReleaseChicago, IL – December 30, 2025 – Today, Zacks Investment Ideas feature highlights Amazon AMZN, Alphabet GOOGL, Meta Platforms META and Microsoft MSFT.Buy the "Mag 7" Hyperscalers Or Are They Spending Too Much?Although they are among the world’s most profitable companies and have strong balance sheets, the immense spending on various AI investments from the hyperscalers in the Mag 7 has been scrutinized.This includes Amazon, Alphabet, Meta Platforms and Microsoft, which are building and operating massive global-scale cloud infrastructures that are needed to run AI models and huge data workloads.There is no doubt that “hyperscaling” is the only way to run AI, cloud, and data-intensive services at the ultimate speed and accuracy that is now expected, but investors have started to ponder whether these companies are overspending on questionable and value-destroying projects.Outside of valuation, this has brought about the need to analyze the capital efficiency of the Mag 7 hyperscalers, particularly return on invested capital (ROIC). To that point, ROIC illustrates the ability to return invested capital into profits and is one of the clearest indicators of long-term shareholder value.Microsoft Headlines CapEx ConcernsNotably, the Mag 7 hyperscalers are all expected to exceed $100 billion in annual capital expenditures for AI-related infrastructure by 2026.At the moment, the highest single-year CapEx figure currently goes to Microsoft. The software giant is now projected to spend $80 billion on data centers this year and has seen its trailing twelve-month CapEx balloon to over $69 billioROIC ComparisonWith Microsoft being the prime example of extremely elevated CapEx levels, its ROIC has actually stabilized and remained flat over the last few quarters after noticeably declining in recent years to 23% although this is still above the admirable level of 20% or higher.Surprisingly, Meta, Alphabet, and Amazon have seen an increase in ROIC, suggesting the market’s worries about their increased CapEx may be overdone, at least for now.Amazon’s sharp uptick has certainly been reassuring as its ROIC has edged closer to 20% with Meta at 29% and Alphabet having the high at 31%.EPS Revisions & Price PerformanceMagnifying the promising rise in ROIC, Amazon’s increased profitability is standing out the most. Benefiting from a pleasant trend of positive earnings estimate revisions, it's noteworthy that over the last 60 days, Amazon’s FY25 and FY26 EPS estimates are still up over 4% and 2% respectively, as shown belowWhile Alphabet has experienced an even sharper uptrend in EPS revisions, this appears to have already been priced into its stock, with GOOGL spiking over 20% in the last three months.As for Microsoft, CapEx concerns are taking away from a slight rise in FY25 and FY26 EPS estimates. That said, Meta stock has been the laggard in recent months, which correlates with what has been an 18% drop in FY25 EPS estimates over the last 60 days, even though FY26 EPS revisions are up more than half a percentage point.Conclusion & Final ThoughtsAmazon stock currently sports a Zacks Rank #2 (Buy), with the other Mag 7 hyperscalers landing a Zacks Rank #3 (Hold). Optimistically, these big tech stocks aren't trading at a stretch to the benchmark S&P 500’s 26X forward earnings multiple, and their EPS growth has remained commendable and justifiable of a slight premium to the broader market.Still, Amazon stock could be the best bet in regard to more short-term upside when reflecting on the trend of positive EPS revisions and the increasing ROIC to offset CapEx concerns. Amazon may also benefit the most from AI investments, not only in terms of boosting its market-leading AWS cloud services but also in streamlining its core e-commerce business.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks