Global equity markets have been exceptionally volatile in 2025, rattled by increasing trade tensions between the U.S. and China, rising global conflicts, and growing concerns about impending recessions in major economies.
However, this market volatility also presents a rare opportunity to invest in high-quality and fundamentally strong artificial intelligence (AI) powered stocks now trading at reasonable valuations. Here's why Meta Platforms(NASDAQ: META) and Amazon(NASDAQ: AMZN) seem geared to benefit from the increasing AI adoption.
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Meta Platforms
Meta Platforms established itself as a leader in the AI revolution, benefiting from unrivaled scale and exceptional geographic reach. The company's performance in its fiscal 2025 first quarter was robust, with revenue and earnings handsomely beating consensus estimates.
Despite aggressive AI investments, the company generated free cash flow of $10.3 billion and returned $14.7 billion to shareholders in the first quarter.
With more than 3.4 billion daily active users -- almost half the global population -- Meta enjoys unmatched access to vast troves of first-party data, which is then used to train its machine learning and AI models. This data advantage enables it to recommend more-relevant content to its users, which in turn leads to a more engaged user base. AI-driven recommendations led to a 7% increase in time spent on Facebook, 6% more on Instagram, and 35% higher on Threads.
In the first quarter, the company introduced the Generative Ads Recommendation Model (GEM), leading to a doubling of ad performance for the same data and computation power. The reduced computing usage enables it to deploy more computational power for model training.
The company started using this new model for ad recommendations on Facebook Reels, which boosted ad conversion rates by 5% in the first quarter, and 30% more advertisers used its AI-powered creative tools in the first quarter.
All these AI-powered initiatives have created a virtuous cycle: Better AI recommendations led to a more engaged user base, attracting more advertisers and users, and finally translating to more revenue and AI investments.
Management is also focused on making business messaging a crucial revenue driver. Many companies in developing countries like Thailand and Vietnam are already conducting commerce through these applications. Meta is developing AI business agents to enable countries with high labor costs to engage in commerce through these messaging apps.
But the stock is trading at just 21.5 times forward earnings, a significant discount to the five-year average multiple of 25. With sales expected to grow 13.6% and earnings per share estimated to rise 25.2% year over year, the current valuation seems reasonable for a leading AI-powered digital advertising player.
Amazon
Amazon is a dominant player in AI infrastructure. Its recent fiscal 2025 first-quarter performance was impressive, with revenue and earnings beating consensus estimates despite the economic uncertainty.
The stock tanked in the aftermath of this earnings release due to softer-than-expected second-quarter guidance, but there is still much to like about this company.
Although still in its early stages, Amazon's AI business already generates multibillion-dollar annual revenue and growing at triple-digit year-over-year percentages. By investing aggressively to give customers the broadest choice across AI technologies, the company can see parabolic growth ahead.
Although it offers GPUs from various providers at the infrastructure layer of its Amazon Web Services (AWS) cloud computing platform, enterprises are choosing its custom Trainium 2 chips for running AI inference workloads. These chips deliver 30% to 40% better price performance than competing GPU solutions.
The company's Bedrock fully managed service offers clients a broad choice of foundational models to build their generative AI applications. Recently, it launched the Nova suite of foundation models in Bedrock, including the Nova Sonic speech-to-speech foundation model for building voice applications and the Nova Act foundation model for improving accuracy in multistep agentic actions.
Subsequently, the company's AI-powered initiatives gives AWS a competitive advantage over other cloud computing players and also positions it to capitalize on the rapidly expanding opportunities in the agentic AI space.
AWS faces intensifying competition from Microsoft's Azure and Alphabet's Google Cloud. Yet with its annualized revenue run rate of over $117 billion and solid 39.2% operating margins, it continues to be a significant growth catalyst and profit engine.
With 85% of the global information-technology spending still on-premises, AWS will continue to benefit from the increasing shift away from this. The company's robust infrastructure also attracts more clients to AWS for AI workloads.
Amazon's advertising business has also emerged as a significant revenue and profit driver, now reaching an average ad-supported audience of over 275 million in the U.S. alone. Thanks to the integration of Amazon Ads across the company's broad ecosystem -- including entertainment properties, live sports, audio content, and retail stores -- it's helping brands effectively reach targeted audiences.
Amazon is also strategizing to handle the tariff uncertainties for its e-commerce business by forwarding inventory purchases. And because it has more than 2 million sellers to fulfill customer orders, management believes that Amazon is in a good place to acquire goods from suppliers who are not subject to extreme cost pressures brought on by tariffs.
Despite all this, the stock trades at 28.6 times forward earnings, far lower than its five-year average of 53.9. Considering its strong fundamentals and reasonable valuation, Amazon seems like a smart buy for long-term AI investors who can ignore short-term market noise.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
