Bernstein analyst Mark Shmulik is turning bullish on two mega-cap names that lagged in 2025, naming Amazon and Meta Platforms as his top large-cap technology picks for 2026 in a research note dated January 12.
Both stocks underperformed last year. Amazon gained 12.8% and Meta rose 5.5% in 2025, well behind the S&P 500, which climbed 19.4%. Bernstein now argues that this lag sets up a favorable reset as markets shift focus.
2026 Shift: From AI Hype to AI Monetization
Shmulik’s core thesis is that 2026 will mark a transition away from judging companies by AI model leadership alone. Instead, investors will reward firms that can deploy, scale, and monetize AI across real businesses.
In that environment, Bernstein sees Amazon and Meta as unusually well positioned, even without dominating headline AI model rankings.
Why Amazon Could Lead Early in 2026
For Amazon, Bernstein expects the narrative around AWS to improve materially.
The firm believes AWS is poised for a growth reacceleration as customers move from experimentation to production-level AI workloads. A key driver is Project Rainier, Amazon’s large-scale AI supercomputer initiative launched in late 2025, which Bernstein sees as a catalyst for cloud demand throughout 2026.
Beyond cloud, Amazon’s retail business remains a quiet support. Continued efficiency gains, deeper robotics integration, and prior cost cuts are expected to keep retail margins on a steady upward path.
Bernstein reiterated a $300 price target on Amazon, implying more than 20% upside, and expects Amazon to be the early leader in 2026 performance, particularly in the first half of the year.
Meta as the “Catch-Up Trade” for Late 2026
Meta, by contrast, is framed as the most compelling catch-up opportunity among large-cap tech names.
Bernstein expects Meta’s aggressive capital expenditure cycle to peak in 2026, easing pressure on cash flows and improving free-cash-flow visibility. That shift alone could drive a valuation re-rating.
Crucially, Shmulik highlights that Meta has already shown it can monetize AI effectively, particularly in advertising and engagement, without owning the top large language model. This practical execution matters more in a monetization-focused market phase.
Bernstein reaffirmed an $870 price target for Meta, pointing to around 35% upside, with the strongest gains expected in the second half of 2026 as capex pressures fade.
A Staggered Rally, Not a One-Trade Bet
Bernstein’s outlook is notable not just for the picks, but for the timing. Amazon is expected to shine earlier in the year as AWS momentum builds, while Meta’s payoff is likely to come later as spending peaks and AI returns become clearer.
Together, the calls reflect a broader view that 2026 may favor execution and earnings leverage, rather than pure AI storytelling, a shift that could finally reward last year’s laggards.
