Investing.com — Morgan Stanley set out its preferred positioning ahead of first-quarter results from Meta, Amazon, and Google, ranking the trio in that order.
Analyst Brian Nowak stated in a note to clients that the bank’s “pecking order is META, AMZN, GOOGL,” citing four macro themes that will shape earnings revisions and stock performance through 2026.
Morgan Stanley highlighted “revenue acceleration and further signal on GenAI ROIC” as a top theme, noting that continued upside in advertising and hyperscaler revenue will influence investor willingness to pay higher multiples.
The bank also pointed to rising 2027 capex expectations, saying it is “~15% ahead of consensus” on hyperscaler spending and that uncertainty over peak investment intensity may cap valuations.
On the consumer side, Morgan Stanley warned that “weakness [is] not priced as of now,” flagging early signs of softer branded advertising markets.
The bank added that “GOOGL [is] not pricing in any disruption risk and META not pricing in any MetaAI success,” making user behavior shifts a key watch item this quarter.
Meta remains Morgan Stanley’s top pick. The firm said it sees the company’s ability to guide to stronger top-line growth as essential to “showcasing the ROIC of its GPU/GenAI investments.” It is also monitoring the rollout of MetaAI across apps and “clarity around Meta’s reported headcount cuts.”
For Amazon, the focus is on AWS, with Morgan Stanley modeling “29%/31%” growth for 1Q/2026 and expecting margins to remain in the low-to-mid 30s. The bank also forecasts a path to “$10–$11 of GAAP EPS in ‘27.”
Google, meanwhile, is expected to deliver high-teens paid search growth and 60% year-over-year Google Cloud growth, with incremental margins “reaching 56% last quarter,” according to the note.
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