Amazon (NASDAQ: AMZN) and Meta (NASDAQ: META) are pulling back from their Q3 2024 highs and providing a second chance for investors to load up. Up more than 30% and 55% YTD, respectively, these stocks are experiencing natural corrections within robust bull markets and providing entry points for new and follow-on investments. 

The caveat is that the corrections could take their shares even lower, providing a more attractive entry, but the declines are likely to be small and short-lived relative to the trend. Both have the support of analysts and solid outlooks for 2025, including double-digit growth, widening margin, and the near certainty they will outperform their consensus estimates, which will support the price action and take it to new highs over time. 

Amazon: A Perfect Blend of Technology and Retail 

Amazon is a perfect play on consumers and AI. Its retail platform is supported and aided by AWS AI enhancements, including operational quality, consumer engagement, and services, not to mention its position in the AI and data center industry. It is up 35% YTD and is indicated to rise by another 35% to 45% from the critical support target. That target is near the summer highs at $200.50, a trigger point for technical traders and investors. 

The analyst trend in 2024 is bullish and suggests at least a 15% upside, with the consensus pegged at $235 in mid-November and the revisions trend positive. The consensus is up more than 40% YOY, with the high-end range another 4000 basis points higher. The analysts tracked by MarketBeat show a high conviction in the consensus and provide a strong tailwind for the market, with 95% rating it at buy and 65% of the targets released following the Q3 results. 

The Q3 results and business trends are solid. The company beat on the top and bottom lines, sustaining double-digit revenue growth and widening the margin. All segments and categories contributed to the growth, but AWS stands out. AWS nearly doubled the pace of Amazon’s core business and is increasing its contribution to the net. The forecast for 2025 is for Amazon to grow by 10% systemwide and for adjusted EPS to grow by a more substantial 15%. 

Cash flow and free cash flow are drivers for Amazon’s stock price. The company produced leverage cash and free cash flow, with FCF more than doubling. The improvements allowed the company to sustain its cash position while investing in growth and repurchasing a significant amount of shares. The share count fell 1.6% year over year in Q3, bringing the year-to-date total to over 2.3%. Buybacks are expected to continue in Q4 2024 and 2025. 

Meta Platforms Invests in Technology: To Rise Another 50% in 2025

Meta Platforms is up more than 55% YTD and could rise by another 50% over the next 12 months. The consensus price target reported by MarketBeat implies a 15% upside, but the trends suggest this is a low target. MarketBeat tracks 43 analysts covering this stock; they show a high conviction, with an 86% rating at Buy and a positive revision trend. The consensus target is up almost 100% in the last year due to the company’s persistent outperformance, rising nearly 3% from October to November, and the high-end range is $811 or nearly 50% above the critical support target. Most recent revisions are in the high-end range above the consensus, and the trend will likely remain positive. The critical support target is near the summer high, around $542.

Meta’s 2024 results are solid. The company is outperforming on the top and bottom lines as internal efficiency combines with AI insights and applications. User metrics also improve, driving leveraged bottom-line results that strengthen the dividend outlook. Meta is a budding dividend growth stock and can be expected to increase its payment in 2025. The business outlook for 2025 is also bullish. The forecast is for revenue to grow by 15% and for EPS to grow slightly slower. 

The slightly slower pace of EPS growth is part of why the stock is struggling with traction in November. However, margin compression is due to ramping spending on AI and other technological advancements, including virtual reality. The company and others have already proven that ramping AI spending pays off in many ways, boosting revenue and improving earnings quality, which should be seen in results over the next 12 to 24 months.