Scotiabank Starts big tech coverage: Amazon and Google Outperform, Meta Neutral

Investing.com -- Scotiabank initiated coverage on three major tech giants—Alphabet (Google (NASDAQ:GOOGL)), Amazon (NASDAQ:AMZN), and Meta Platforms—assigning Sector Outperform (Buy) ratings to Google and Amazon, while rating Meta Platforms (NASDAQ:META) as Sector Perform (Neutral). 

The analysts, in a note Friday, highlighted key differences in their growth trajectories and long-term competitive positions, helping to explain their ratings.

They explained that one of the primary distinctions between these companies is the predictability of future consumer usage. 

"In the cases of Amazon and Google, we have a high level of confidence that consumers will use their services more in the future," said Scotiabank, while Meta’s future usage is less predictable. 

According to the bank, hours in a day are the "ultimate limited resource," and while Amazon and Google help consumers save time, Meta’s business model relies on keeping users engaged for longer periods.

"Amazon and Google give you time, Meta sells your time," they stated. Amazon and Google make money by quickly directing users off their platforms—through paid search ads for Google and completed transactions for Amazon—while Meta earns by increasing user engagement, similar to traditional media models.

Scotiabank is also optimistic about the company’s potential in artificial intelligence (AI). Amazon and Google are expected to capitalize the most on AI investments, with their cloud services playing a pivotal role in monetizing corporate AI applications.

In contrast, Scotiabank sees Meta’s AI efforts as more focused on improving ad targeting and consumer engagement, which they describe as "incremental rather than revolutionary."

Overall, while Scotiabank sees strong potential for Amazon and Google in AI-driven growth, they are less certain about Meta’s long-term competitive edge in the evolving tech landscape