S&P 500’s Strong Performance Faces Hurdles in 2025
The S&P 500 (SNPINDEX: ^GSPC) achieved back-to-back annual gains exceeding 25% in 2023 and 2024, driven largely by technology stocks. This two-year performance matches only the dot-com boom of 1997 and 1998.
The “Magnificent Seven,” a group of leading tech companies, significantly outperformed the broader index. Investors lacking these stocks during 2023 and 2024 likely saw notable losses compared to the S&P 500.
As of 2025, the S&P 500 faces a turbulent start due to global trade tensions initiated by President Donald Trump’s “Liberation Day” tariffs. All Magnificent Seven companies are currently trading below their all-time highs. Shares of Meta Platforms (NASDAQ: META) and Amazon (NASDAQ: AMZN) have dropped 9% and 15%, respectively, from their early 2025 peaks.
Investment Potential in Meta Platforms
Meta, the parent company of Facebook, Instagram, and WhatsApp, serves over 3.4 billion users daily. The company is focusing on user engagement, as nearly half of the global population already uses its platforms. Increased engagement drives more ad revenue.
Meta employs artificial intelligence to enhance its recommendation engine, which boosted user time on Instagram by 6% and Facebook by 7% in early 2025. CEO Mark Zuckerberg forecasts that AI will also help businesses create more effective advertisements, simplifying the ad creation process.
Additionally, Meta’s AI has gained rapid popularity, reaching nearly 1 billion monthly active users within a year of launch. The company plans to invest up to $72 billion in data center infrastructure to further develop its AI capabilities.
Meta’s recent earnings per share (EPS) of $25.64 gives it a current price-to-earnings (P/E) ratio of 25.2, making it the second-most affordable among the Magnificent Seven, surpassed only by Alphabet.
Amazon’s Ongoing Growth
While e-commerce is Amazon’s primary revenue source, investor interest is shifting toward Amazon Web Services (AWS) and its extensive cloud computing capabilities. AWS aims to dominate the core AI sectors of hardware, LLMs, and software.
AWS leverages data centers filled with chips, including its proprietary Trainium2, to reduce AI training costs for developers by up to 40%. Additionally, AWS now offers a family of LLMs called Nova, streamlining AI development for businesses.
The AWS platform has generated $29.2 billion in revenue during the first quarter of 2025, contributing 63% of Amazon’s overall operating income. This illustrates AWS’s critical role in Amazon’s profitability, making it a focal point for investor scrutiny.
Given AWS’s leadership in AI infrastructure, Amazon could potentially reach the $3 trillion valuation mark, joining other tech giants like Microsoft, Apple, and Nvidia.
Should you invest $1,000 in Meta Platforms right now?
Before you buy…
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Meta Platforms Excluded from Analyst’s Top Stock Picks
Meta Platforms, Inc. was not included in the recent list of the top ten stocks recommended by Motley Fool Stock Advisor. The selected stocks are expected to yield significant returns in the future.
Historically, stocks like Netflix and Nvidia achieved impressive returns after being recommended. An investment of $1,000 in Netflix on December 17, 2004, would now be valued at approximately $651,049. Similarly, a $1,000 investment in Nvidia since April 15, 2005, would be worth about $828,224.
As a point of reference, Stock Advisor boasts an average return of 979%, significantly outperforming the 171% return of the S&P 500.
For full details on the ten recommended stocks, investors can join Stock Advisor.
John Mackey, former CEO of Whole Foods Market, sits on The Motley Fool’s board. Other board members include executives from Alphabet and Facebook. The Motley Fool holds positions in multiple companies, including Meta Platforms.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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