Investing in Tech Giants During Today’s Market Correction

Chicago, IL – March 10, 2025 – Today, Zacks Investment Ideas features insights on Alphabet (GOOGL), Amazon (AMZN), and Meta Platforms (META).

Capitalizing on Big Tech at Favorable Valuations: GOOGL, AMZN, META

The U.S. stock market has recently entered correction territory. The S&P 500 is currently down 8% from its recent all-time highs, while the Nasdaq 100 has slipped by 11%. This decline stems mainly from uncertainties surrounding tariff trade policies and substantial federal spending cuts, both of which have negatively impacted economic growth projections and increased risk for companies engaged in international trade.

Although market corrections can evoke fears of further declines and provoke emotional responses, it’s crucial to maintain perspective. Historically, the U.S. stock market has shown a long-term trend of growth, and corrections often provide excellent buying opportunities. Focusing on high-quality companies with proven records of consistent sales and earnings growth is essential during such times.

Among the most resilient and innovative companies today are the Magnificent 7, a group of tech giants noted for their strong performance. This article highlights three major players: Alphabet, Amazon, and Meta Platforms. These firms are trading at attractive discounts compared to their historical valuations, effectively minimizing downside risk while showing significant potential for long-term returns driven by dominant positions in key technological and commercial trends.

Amazon: Seizing the Lowest Valuation in Company History

Amazon has maintained its status as a leader in e-commerce and cloud computing—two transformative sectors of the past two decades that continue to grow. The company actively diversifies, exploring high-growth areas such as artificial intelligence (AI) and digital advertising.

Amazon Web Services (AWS) is the clear front-runner in cloud computing, generating substantial operational income while benefiting from increasing enterprise cloud adoption. Furthermore, Amazon’s significant investment in AI, including a major stake in Anthropic—the creator of a prominent large language model (LLM)—positions it well in a rapidly evolving technological landscape. The surge in AI demand across different sectors makes Amazon a prime candidate to leverage cloud-based AI initiatives and enterprise AI solutions.

Evaluating Amazon’s valuation reveals that it is currently at historical lows, presenting a compelling opportunity for long-term investors. The stock’s 10-year median forward price-to-earnings (P/E) ratio stands at 87.6x, whereas it trades at just 31.8x forward earnings today—the most affordable valuation in years. With earnings anticipated to grow at an annualized rate of 22.85% over the next three to five years, this contraction in valuation reduces downside risk while paving the way for robust long-term gains.

Alphabet: Capitalizing on Historical Discounts and Growth Prospects

As a cornerstone of the digital economy, Alphabet’s core business—Google Search—continues to deliver solid sales and earnings growth, despite investor worries about AI disrupting traditional search traffic. In fact, Alphabet is integrating AI into its operations, with early indicators showing that AI-enhanced search summaries increase user engagement rather than diminish it. The company is also exploring next-generation AI search tools, affirming its focus on innovation in the search domain.

Beyond search functionality, Alphabet boasts other undervalued growth avenues, particularly Waymo, its self-driving car entity. Unlike many competitors still in testing phases, Waymo is already operational, providing over 200,000 rides weekly. As this technology escalates and extends to additional markets, it has the potential to become a significant profit center not yet adequately represented in Alphabet’s current market value.

Alphabet is also advancing in cloud computing, where Google Cloud is expanding at a notable rate of 30% annually. Rising demand for AI-driven workloads and cloud services is transforming Google Cloud into a critical component of Alphabet’s revenue strategy.

Despite these strong long-term growth drivers, Alphabet trades at a historic discount. The stock’s 10-year median forward P/E ratio is 25.8x, while it currently stands at only 19.4x forward earnings. Given the forecasted earnings growth of 15.5% annually over the next three to five years, this valuation compression offers a significant opportunity for investors anticipating both stability and upside.

Meta Platforms: A Leader in Digital Advertising

Meta Platforms has established itself as a titan in digital advertising and social media, reaching a remarkable 3.35 billion daily active users across platforms like Facebook, Instagram, and WhatsApp. Despite facing competitive pressures and evolving digital trends, Meta remains an undervalued powerhouse, showing considerable cash generation capabilities. Over the past decade, it has achieved an annualized earnings growth rate of 36%, currently producing $1 billion in free cash flow weekly—a testament to its robust business model.

Additionally, Meta is at the forefront of AI integration into digital advertising, automating ad creation and enhancing user targeting across its platforms. This innovation not only drives efficiency in its ad network but also enables businesses to achieve superior results while boosting Meta’s monetization and ad revenue growth. This AI-driven strategy is key to maintaining Meta’s competitive edge in an evolving digital arena.

Looking ahead, earnings are projected to increase at an annualized rate of 18.3% over the…