Piper Sandler Highlights Amazon's Stronger Capital Returns Compared to Meta and Alphabet
On August 31, Piper Sandler reiterated an Overweight rating for Amazon (NASDAQ:AMZN) with a $320.00 price target, citing its superior return on invested capital (ROIC). The firm noted that while all three Big Tech companies—Amazon, Meta Platforms Inc. (NASDAQ:META), and Alphabet Inc. (NASDAQ:GOOGL)—are investing heavily in AI, Amazon's ROIC is holding up better than its peers'. Piper Sandler expects Amazon’s ROIC to decline from 17% between 2018-2025 to around 14% by 2026, a smaller drop compared to Meta and Alphabet. The firm attributes this difference in performance partly to the focus of each company's spending. While Meta and Alphabet are investing heavily in frontier AI models with uncertain monetization timelines, Amazon is channeling its resources into AWS, which has shown strong revenue growth and contract backlogs. In Q2 2026, AWS reported a year-over-year revenue increase of 37% to $42.2 billion, along with rising contract backlogs from $364 billion to $496 billion. Piper Sandler also noted that Amazon's ROIC is the most consistent among the three companies and aligns well with management commentary. However, a projected decline in ROIC could continue if AWS capacity additions outpace demand or pricing competition intensifies.
Topics: AI investment AWS growth Big Tech comparison ROIC trends