Shares of technology giants Amazon (AMZN) and Meta Platforms (META) gained 80.9% and 194.1%, respectively, in 2023. This significant growth was attributed to the resilient economy, coupled with their strategic investments in artificial intelligence (AI) and efforts to streamline costs – all of which contributed to driving up their stock prices.  

The positive momentum in their businesses has continued into 2024, as evidenced by the sustained upward trend in their share prices. Meta Platforms has gained 33.4% year-to-date, while Amazon’s stock appreciated by 11.5% during the same period. 

Given this background, let’s delve into various factors to gain insights into what the future holds for Amazon and Meta stocks in 2024, and determine whether they can stage a repeat of the remarkable gains they delivered in 2023.  

The Outlook for Amazon Stock in 2024

Internet commerce and cloud computing giant Amazon delivered revenue of $574.8 billion in 2023, up 12% year-over-year. Its operating income tripled year-over-year to $36.9 billion. Further, its free cash flow improved to an inflow of $36.8 billion for the trailing twelve months, compared with an outflow of $11.6 billion in the prior year.  

Amazon successfully reduced the cost-to-serve of its stores, enhanced delivery speed, and expanded its retail offerings by introducing tens of millions of new items to its platform. Furthermore, it experienced growth in the advertising and cloud business (AWS). The company’s operating margin saw substantial improvement, attributed to its transition from a single national fulfillment network to a regionalized model, which reduced delivery distances and associated costs. 

These positive developments significantly bolstered Amazon’s share price. Looking ahead to 2024, Amazon CEO Andrew Jassy affirmed the company’s commitment to further lower its cost and focus on faster delivery, which will likely significantly boost its retail sales and margins. 

Besides retail sales, Amazon’s advertising revenue continues to grow rapidly, emerging as a key growth catalyst. Its advertising services revenue jumped over 24% in 2023, benefitting from sponsored ads. Moreover, it is growing at nearly twice the rate of its AWS business, which is impressive. To capitalize on increasing demand, Amazon has expanded its offerings to include sponsored TV and is further enhancing its services by integrating machine learning technologies. 

Amazon’s AWS business registered about 13% growth in 2023 and could cross $100 billion in annualized revenue in 2024. Acceleration in large deals, a strong customer pipeline, integration of AI in its offerings, and ongoing cloud migration will likely support the segment’s growth.  

Overall, Amazon is well-positioned to deliver stellar growth in 2024 and benefit from its AI-led initiatives, which will likely support the uptrend in its share price and enable it to deliver above-average returns. This is also reflected in analysts’ optimistic outlook on AMZN. Out of the 45 analysts covering Amazon, 41 have a “Strong Buy” recommendation, three analysts recommend a “Moderate Buy,” and one has a “Hold.”   

However, as AMZN stock has already appreciated significantly in value, its growth this year may not compare to that of 2023. Even with a Street-high price target of $230, suggesting a potential upside of nearly 36%, Amazon might not replicate its 2023 performance. The stock’s average price target is $202.25, which implies about 19.3% growth potential from current levels. 

Forecasting the Trajectory of Meta Platforms Stock

Meta Platforms is benefiting from its dominance in the social media space, its aggressive investments in AI, and AI’s integration into its offerings. The company has managed to significantly improve engagement on its platforms, and is effectively monetizing that activity.

Notably, Meta CEO Mark Zuckerberg said during the Q4 conference call that over 3.1 billion people use at least one of the company’s apps, including Facebook, Instagram, and WhatsApp, daily. While the company managed to drive engagement, 2023 was also a so-called “year of efficiency.” 

That meant Meta undertook significant workforce reductions while concentrating on operational streamlining, resulting in a remarkable 69% year-over-year increase in net income for 2023, alongside the initiation of dividend payments. The company also unveiled innovative products like Threads.

Meta Set to Accelerate Growth with AI Investments and Innovative Products

Meta Platforms Inc. (META) has made significant strides in the realms of augmented reality (AR), mixed reality, and artificial intelligence (AI), showcasing robust growth potential in the upcoming quarters. The company’s strategic advancements and substantial AI investments position it favorably to drive revenue and deliver solid financial results in 2024.

Groundbreaking Achievements in AR and AI

Meta recently unveiled its much-anticipated Ray-Ban Meta smart glasses, marking a significant breakthrough in the AR space. These smart glasses promise to revolutionize the way users interact with their surroundings and digital content, expanding the horizons of AR technology. Furthermore, the company revealed its latest advancements in mixed reality with Quest 3, solidifying its position as an industry leader in immersive technology.

Strategic AI Investments

Bolstering its commitment to AI, Meta has made substantial investments in AI technologies, laying the groundwork for the development of future advanced AI products and services. This strategic move not only enhances the company’s innovation capabilities but also underscores its dedication to providing cutting-edge solutions in the AI space. Meta’s focus on AI is poised to play a pivotal role in shaping its future growth trajectory.

Promising Outlook and Analyst Recommendations

Looking ahead, Meta is well-positioned to benefit from the increasing integration of AI functionality into its offerings and the introduction of new products, which are expected to drive higher user engagement. Additionally, the company’s commitment to cost management is likely to bolster its bottom line and enable it to return substantial cash to shareholders through share repurchases and dividends.

Industry analysts have echoed similar optimism, with a vast majority of them recommending a “Strong Buy” for META stock. The overwhelmingly positive sentiment from analysts underscores the market’s confidence in Meta’s potential for sustained growth.

Financial Performance and Future Expectations

Meta’s robust balance sheet, coupled with the recovery in ad revenue and its extensive user base, positions the company favorably to deliver solid financial results in 2024 and beyond. The positive outlook reflects the company’s resilience and ability to adapt to evolving market dynamics.

Despite the overwhelmingly positive sentiment, it is important to note that Meta stock has already experienced significant gains, potentially indicating that the positives are already priced into its shares. Analysts’ average price target of $500.98 implies a modest 6% upside potential from current levels, which suggests cautious optimism within the investment community.

On the date of publication, Sneha Nahata did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.