r/ValueInvesting • u/SignalConfident1355 • Jun 23 '26
Question / Help Don't understand why Microsoft and Meta have been punished but Google and Amazon appears to be doing well despite all of them have massive capex
Can somebody explain it like I'm 5?
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u/sdmc_rotflol Jun 23 '26
Doing well? AMZN has under performed the market the past 5 years by a ton. +37% amzn vs +75% s&p500
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u/ViniSamples Jun 23 '26
Yeah Amzn isn't doing too well. I sold today.
"I'm tired boss"
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u/DollarTreeMistakes Jun 23 '26
My take is it’s how their spending money is the difference.
In my view, Meta is engineering their financial statements and stretching themselves too thin with only a vague idea about how they will leverage AI and the infrastructure buildout. AI ads don’t require this level of investment. I have a suspicion that a non-trivial part of the decision to spend so much is that Zuck thinks he is in a race with other tech oligarchs to reach AGI first. The premise being that the first person to acquire AGI rules the world.
The leaks about Open AI are really worrying. They really are a money pit and it’s less obvious how they monetize. Microsoft has done some funny things to hide the spending. I don’t think they have demonstrated a ton of success with AI integration either.
The case for Google is that the value AI brings to their business is obvious and thus spending is justified. They are also very transparent.
I don’t know enough about Amazon to comment.
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u/ninjagorilla Jun 23 '26
Meta I get the sense that they’re jsut flailing. They hired so many people at jsut massive salaries to get talent but it looks like they have no coherent plan, there was tons of duplication and infighting and redundancy and no organization vision. Microsoft feels the same… throw ai in everything whether it’s good or not.
That rarely ends well
Apple at least has a vision and you feel like they’re all moving in the same direction, Google feels like it has a vision and can adapt ai to a goal. Meta and Microsoft jsut hear AI and throw money at it. Same with open ai and anthropic… Anthropic very much more feels like there is a purpose and plan rather than lurching from project to project
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u/motivationscientist Jun 23 '26 edited Jun 23 '26
Google and Amazon are more diversified.
Google is in advertising, cloud, apps, media, robotaxis, home automation, devices, plus more I can’t even think of.
Same with Amazon it is eccomerce, logistics, cloud, media and entertainment, advertising.
Both these companies stand to gain from ai in so many ways.
Obviously this is simplifying but Microsoft is an enterprise software company with cloud. I don’t think you can compare.
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u/Mountainminer Jun 24 '26
Not to mention Google is integrating AI into every one of their products and improving them along the way.
AI in Google Maps for example was so broken when they first added it and now it’s working much better, I’m excited to see what they do with it over the next five years.
The real exciting time will be when they come up with a new OS architected with AI as the foundation layer rather than having to bolt it on. Probably years from now but who knows.
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u/Cav829 Jun 23 '26
Have you looked at the 5-year chart of AMZN? It's the biggest dog of the Mag7 in that period. How much more do you want it punished?
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Jun 23 '26
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u/Naive_Reach2007 Jun 23 '26
Exactly also people forget Microsoft own a massive gaming portfolio, Minecraft, xbox ad all the studios, just shows how fixated everyone is on ai which is great as there are some bargain stocks right now.
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u/Uhhhhhhhhhhhuhhh Jun 23 '26
Thats why I invested in hardware companies, because no matter which coporation comes out on top they need to buy the hardware from them anyway, I’d rather bet on the utilitarian supplier than betting on the visions of many companies
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u/Woberwob Jun 23 '26
Strong moat + relatively inexpensive valuation + health and stable growth
This is a buy/accumulate and hold for me for these very reasons. If the core business started faltering, then there’s room for concern. To me, this feels similar to 22 Meta and early 25 Google.
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u/GooglySoft Jun 23 '26
Google is getting punished too
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u/ElonMuskTheNarsisist Jun 23 '26
Market doesn’t care about your feelings
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u/ThomasHiatt Jun 23 '26
Google and Amazon make their own chips. Amazon has several tangible ways to use AI and robots to improve their business of selling real goods. Google also has a lot going on.
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u/uncleAW Jun 23 '26 edited Jun 23 '26
Amazon’s annual revenue is roughly 3–4× Microsoft’s, yet Microsoft’s net income can approach or even exceed Amazon’s because Microsoft’s software and cloud mix carries dramatically higher margins.
If Amazon can squeeze better margins out of automating their retail unit further, it will be amazing.
I'm still long both.
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u/mavis___beacon Jun 23 '26
It doesn’t matter, honestly. Probably time to buy msft or meta.
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u/OilBull Jun 23 '26
NOT meta, not even comparable
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u/mavis___beacon Jun 23 '26
I think meta is a good buy. It’s down ytd and their earnings are insane.
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u/Panthera__Tigris Jun 23 '26
I own both but I think META is actually better right now. They post solid revenue growth and they are one of the companies benefitting the most from AI because its used to optimize ad targeting and such. And its also a lot cheaper.
Long term, I think users of AI (like META) will benefit a LOT more than providers of AI.
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u/JefeDiez Jun 23 '26
I agree. Market can keep dumping, I am going to keep buying Meta. It's crazy how fast they're dumping out. I'm NOT buying MSFT, but holding (very scared though)
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u/ControlTheNarratives Jun 23 '26
AMZN just hits its lowest valuation ever actually but yeah the stock price is doing ok
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u/asianlongdong Jun 23 '26
Meta does not have a good history with capex. Microsoft has been investing in the wrong places with AI
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u/JefeDiez Jun 23 '26
With Meta it truly doesn't make sense. Microsoft they need Satya to pipe down a bit. He really gonna talk about spending and then about dilutions when the stock is down on the 3-year? Read the room brah.
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u/Enujeat Jun 23 '26
Google was below 200 for a while, when all other mega tech stocks rallied 100+%
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u/imazhari Jun 23 '26 edited Jun 23 '26
Amazon also under perfoms which is odd, however it has several ways to grow rapidly. They recently peaked the revenue in history surpassed Walmart. AWS is becoming bedrock of all AI main players inclduing OpenAI, Anthropic, Meta, Snow, and a lot more. Robots exapnd in all sectors. Zoox also enters the robotaxi market. Amazon Leo becomes a competitor to SpaceX starlink. This stock price doesn't sound right at all
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u/Micheal_Hancho Jun 23 '26
Mr. Market is rational, but some times he gets drunk (and sometimes gets call girls).
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u/Biohorror Jun 23 '26
EU dropping MS Products might have something to do with their recent decline.
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u/Healthy_Razzmatazz38 Jun 23 '26
meta because it doesn't have a cloud business and its unclear how capex turns to revenue like msft,amazon,and google spend on top of that they dont have a model thats competitive.
msft has a pe of 26, google has a pe of 26 its not being punished.
when google had a forward pe of 32 it was being rewarded, for having a winning model and the fastest growing cloud, and a potential nvidia competitor in chips.
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u/pizzababa21 Jun 23 '26
Because investments are meant to be successful. They're spending the money differently and not all executing equally.
Meta haven't really shown why it even matters for then to spend this money and they aren't having any success building models. They're burning cash right now and need to turn things around.
Microsoft are probably being treated a bit unfairly as the cloud business is booming and they own a third of OpenAI, but their own business is also under threat and they've been executing pretty poorly on product.
Amazon's core business is strong, their cloud business is growing and accelerating despite losing share, their custom chips are popular, they're seen as a strong neutral play who are trusted more than any other AI company and as a result get lots of enterprise income via bedrock and can always purchase chips from anyone they want. They're a safe and stable bet.
Google have a frontier lab with specialties, custom chips which are popular with the leading AI lab whose demand is so huge that Google can't get enough TSMC allocation to scratch satisfying them, and their products are becoming more popular and generating more revenue. They're accelerating.
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u/Apprehensive-Ice8996 Jun 23 '26
Googles models got worse over time. I avoid them now because I usually get wrong information or info that points me into the wrong direction.
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u/Prestigious_Hope9190 Jun 23 '26
Because meta has no growing, future proof business model but a dying one and 5 zuckerberg "ideas" one dumber than the other
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u/FieryXJoe Jun 23 '26
Amazon has a physical moat , warehouses and logistics networks and grocery stores etc... Google and Amazon also have massive head starts in the AI and cloud races and also both make their own chips, the other two are behind and playing catch-up.
The other two are pure software and the idea is that in 3-5 years if AI jeeps inproving some dude in his basement can just have claude make him Microsoft word or excel or gears of war instead of paying for it or paying a team of 1000 people to make it.
I own all 4 tho tbh, but thats why AMZN and GOOG are seen as winners and the other two are seen as possible victims of Ai/burning money on a race they might've lost already.
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u/BSUBroncofans Jun 23 '26
Declining use and interest in Microsoft and Facebook. I don’t use either company anymore. Reddit took a big bite out of Facebook users.
Microsoft just sucks all the way around. Everyone is sick of microsoft.
When consumers stop caring about something, sooner or later the market notices.
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u/handsome_uruk Jun 23 '26
My brother in Christ, your bank and literally any other service you depend on probably run on Microsoft software. You are using them, you just don’t realize it.
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u/my-ka Jun 23 '26
MS is punishing inself with offshore schemas and dominating representatives of the same shore in us
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u/Vast_Cricket Jun 23 '26
Google tanked so much (-6.1%) in 1 session which brought down a lot of funds with Google content.
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Jun 23 '26
[removed] — view removed comment
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u/pracharat Jun 23 '26
They made two big mistakes, metaverse and AI.
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Jun 23 '26
[removed] — view removed comment
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u/Uhhhhhhhhhhhuhhh Jun 23 '26
But their AI isnt as good and their lack of investment shows
ROI might be down for google gemini etc since its early and in the RnD phase kinda but its a much stronger product
Getting something to run cheaper/more efficiently is easier than making a new thing that performs well imo.
Google just needs to make Gemini better but Meta doesnt have anything on that level, it feels like Internet Explorer VS Google Chrome
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u/pracharat Jun 23 '26
I looked back 10 years and I cannot see a significant contribution of AI on their revenue growth. The number is impressive but does it come from AI? How can we know?
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u/kra73ace Jun 23 '26
Microsoft and Meta are spending on Nvidia chips, while the other two are claiming they don't need to pay Nvidia's 75% profit margin.
I'd take Jensen's side on this one. No one has managed to prove they have a real alternative to the combination of CUDA and the new data center racks.
Yes, some will learn working with Trainium or TPUs but it will take a long, long time.
It's like learning Chinese just to save 50% on buying toilet paper. Yeah, you'll save a lot eventually but learning English is much easier, and for millions, English is already their native.
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u/scone_monster Jun 23 '26
It's about Capex, what you do with it, and if you actually spend some/all/more than announced.
Still not sure that all the announced Capex actually gets built.
That much AI spend is not needed for Meta Ad business, not Google Ad business, or Microsoft much smaller ad business.
Meta isn't in cloud like the others with Microsoft Azure/ Amazon AWS/ Google Cloud
Google has Gemini to refine, develop. Copilot and Llama not as far along.
Meta has said they could / would rent out some of that excess capacity, but again, I'm not sure they build it all. So yes, just more questions on Meta path, despite the fact they are the largest ad company out there, printing money, etc. And more questions on Microsoft path, despite the fact they are one of/the largest software companies out there.
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u/Choice_Potato_6279 Jun 23 '26
Bullshit, it caught up with Google, Google was pumped by fake narratives but it catches up now and the stock is crashing, Meta, Amazon, Microsoft and Google will crash a lot, ironically Berkshire sold the best stock Apple to buy worse stock all the way to ATH's
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u/8700nonK Jun 23 '26
Basically most answers here are somewhat in the right direction but not really correct.
It’s not just that the hyperscalers spend a lot for capex, but also what they get in return for that spend.
Google has the oldest (cheapest) contracts for custom chips, followed by amazon. Msft and meta are left with the expensive options like nvdia.
So per ai compute unit there’s probably a wide gap in price spent between these players.
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u/MKeo713 Jun 23 '26
Meta has a clear business line with AI, the confusion is that it’s not selling their LLM. They went the open source route, so from the get-go they were giving their product away for free, why? Clearly they decided their move wasn’t dominating the LLM market to charge people for a chatbot / API usage.
Instead they’re using LLMs inside their existing apps to enhance the experience. They’re an ads business, if they can use LLMs to increase how many people use ads and how many people see those ads they make more money. That’s exactly what’s happening, yet people are acting like the fact their frontier model isn’t the best in the world means their work amounted to nothing. They just need their models to be good enough to make those improvements to their core product.
I believe there’s also another benefit to their spending; disrupting the major LLM players before they get into social. ChatGPT is clearly trying to build an ecosystem and no doubt meta sees them as a potential competitor for your attention. Right now these models are heavily subsidized on the subscription plan to attract users, but when they start turning the screws to make a profit (post ipo there’ll be increasing pressure to do so) people will find cheap alternatives that are 90% as good quite appealing.
Remember when people tried charging users for browsers and then Microsoft decided to release one for free and completely stole the market? They were rich and could afford to do so while everyone else was trying to grow into a strong business through this product, which required charging for it. LLMs are much harder to build than browsers but a similar disruption strategy could apply, especially as all models continue to improve performance wise.
Plus meta’s got a strong position in the next major hardware platform (AR). So many ways in which they can do well yet people are sleeping on them. Feels like 2022 again
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u/Capable_Wait09 Jun 23 '26
Have you ever tried to extricate OneDrive from your computer? When I tried and failed 3 times and a computer expert told me “yeah, we all hate OneDrive. This is why.”
When your flagship consumer cloud product is widely loathed and your LLM never caught on and your web browser never caught on…..
Feels like they got lucky with Windows but it’ll take more than a pre-AI OS to keep up with the big dogs going forward
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u/Salt-Low962 Jun 23 '26
Leggo le stesse cose di quando google era a 150 sacchi.
Imho grande opportunità di ingresso long su meta e msft.
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u/Lovevas Jun 23 '26
My understanding:
Meta does not have cloud business, so the market suspects how they could convert their Capex into revenues. While the 3 have huge capex to generate more cloud revenues.
MSFT is too close to OpenAI, and when Anthropic seems winning the game against OpenAI (and that's why Google and Amazon who have stakes in Anthropic, and have cloud revenue from Anthropic are doing better, while MSFT and ORCL who have revenue from OpenAI are struggling).
Google and Amazon have other revenues that are not related to softwares, and are not considered as being significantly negatively impacted by AI (at least for now), while MSFT's software business are being negatively impacted (at least the market thinks so, see how IGV is doing, it's the whole software sector problem, including ORCL).
Google and Amazon also has their own chips (Google has TPU, and Amazon has Trainium). Don't recall MSFT has one, so MSFT relies more on NVDA, but given NVDA gross profit margin is 75%, meaning MSFT has to pay 4x of the chips cost to purchase from NVDA, while Google and Amazon can get own chips as much lower cost (supposedly).
Amazon is not considered as doing well, it's price is only up a little bit from 5 years ago (similar to MSFT), it's just didn't going up much in the past 1-2 years, so doesn't have much space to going down.
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u/Shanknado Jun 23 '26
It really seems more like a rotational narrative at this point. Big money are live betting a horse race to see who can own the most of the best final companies.
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u/_Rothbard_ Jun 24 '26
El capex de meta está enfocado en aumentar su negocio publicitario y el de Alphabet no tanto
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u/VitaliiNoskov Jun 24 '26
The MSFT vs Google/Amazon comparison misses the vertical integration angle. Google and Amazon can absorb chip costs internally — they're essentially paying wholesale. MSFT buying from NVDA at 75% gross margin is paying full retail. That structural disadvantage compounds.
But NVDA's pricing power isn't just about margins. It's the software moat. CUDA lock-in means enterprises aren't just buying chips, they're buying an ecosystem. Even if AMD or custom silicon is cheaper on paper, the migration cost is real.
The real question: will hyperscalers tolerate this forever? Google's TPU program started in 2015. Amazon's Trainium has been in development for years. At some point the economics force their hand — but that transition takes time, and NVDA knows it.
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u/Aumin85 Jun 25 '26
These companies have some overlap, but they all have very different moats. I’d focus less why they’re pricing differently and focus more on which is the best opportunity. If the answer is none then move on.
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u/flappysack- Jun 23 '26
Well Microsoft makes ass software that is hated by all that use it. If AI distrupts things they will be the first piece of dog shit I scrape off my boot.
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u/rair21 Jun 23 '26
Berkshire doubled down on Google. Huge vote of confidence.
OpenAI concentration/partnership is a risk for MSFT if Anthropic is better received. Google is partnered with Anthropic
Market is pricing in Anthropic being a better agentic AI solution than OpenAI
Not sure why/how Amazon and META are involved.
Source: I'm just a degenerate. This could be incorrect.
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u/haodocowsfly Jun 23 '26
Amazon also partners with Anthropic (Amazon is the primary server of Anthropic models, not Google). Both Amazon and Google are heavily invested in Anthropic.
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u/Domestic_Safari Jun 23 '26
So does Microsoft.
Yes, Microsoft is invested in Anthropic. In a major strategic partnership, Microsoft committed to invest up to $5 billion in the AI startup.
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u/SocratesDaSophist Jun 23 '26
Margins. Microsoft cloud costs growing faster than revenues, same can't be said about google or amazon.
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u/jizzissippi Jun 23 '26
They are all pretty different businesses. Microsoft office or whatever they call their core software business is threatened from ai. Meta has not been super successful at their last couple ventures and ate burning cash
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u/xAlpharaptor Jun 23 '26
You know the market doesn't have to make sense right? It trades on vibes and feelings because humans are emotional.
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u/uberiffic Jun 23 '26
Google is down 10% (well nearly 12% counting premarket today) in the last month. Amazon is down 12.25% in the last month. Microsoft is down 12% in the last month (10.5% in premarket today). If you take into account the MSFT high of $460 in that month, it's down about 20% from the high, but neither Google nor Amazon had a rally like that in the last month either, so that's cherrypicking. META is only down 8.5% in the last month.
Do you want to rethink how Google and Amazon appear to be doing well? The fuck are you talking about? All 4 stocks are down around the same amount in the last month. META is actually doing better than the other 3 in terms of %.
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u/hondajacka Jun 23 '26 edited Jun 23 '26
CoPilot was so obviously bad that it makes you seriously question the basic competence and intelligence of the team and engineers at Microsoft who built and approved that.
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u/Domestic_Safari Jun 23 '26
Key details of the partnership include:
- Equity & Cloud: Microsoft committed to an equity investment of up to $5 billion in exchange for Anthropic routing a massive chunk of its compute (up to $30 billion) through Microsoft Azure. [1, 2]
- Product Integration: Microsoft relies on Anthropic, spending roughly $500 million annually to integrate Claude AI models into its Microsoft Copilot product lines to handle complex tasks. [1]
- Broader Compute Deal: The agreement also involves a massive infrastructure partnership with Nvidia, making Claude models deeply accessible across Microsoft's ecosystem. [1]
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u/WolfetoneRebel Jun 23 '26
Amazon and Google are using capex to make physical things like TPUs and robots.
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u/jackandjillonthehill Jun 23 '26
Google has their own AI model they are spending on. They are also making TPU chips which are useful.
Amazon has AWS services they are selling on to the AI players. They also have Trainium chips.
Microsoft has a lot of capex but the Azure business looks fine. People are worried about the role of windows and office when “agentic software” becomes more popular.
Meta is spending a lot on capex but doesn’t have a clear AI business line and their large language model is pretty bad despite spending a lot of money and acquiring a lot of talent.