The Two Best Stocks To Buy In 2026

Key Concepts

• Capex (Capital Expenditure): Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, or equipment.
• AWS (Amazon Web Services): Amazon’s cloud computing platform, which provides on-demand cloud computing platforms and APIs.
• Vertical Integration: A strategy where a company owns or controls its supply chain, such as Amazon designing its own custom silicon chips (Graviton, Tranium) to reduce reliance on third-party suppliers like Nvidia.
• Free Cash Flow (FCF): The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.
• Multiple Expansion: An increase in a stock's price-to-earnings (P/E) ratio, often occurring when investors become more optimistic about a company's future growth.
• AI Inference: The process of using a trained AI model to make predictions or perform tasks.
• Bedrock: An Amazon service that provides a choice of high-performing foundation models via a single API.

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1. Investment Thesis: Amazon (AMZN)

The speaker identifies Amazon as a top buy for 2026, emphasizing that current skepticism regarding its massive capital expenditure (capex) is misplaced.

• Strategic Capex: Amazon is investing heavily in infrastructure (data centers, power, and chips) to meet surging AI demand. CEO Andy Jassy argues that these investments are highly predictable because they are backed by existing customer commitments.
• Vertical Integration (Custom Silicon): Amazon is shifting away from reliance on Nvidia by developing its own chips:
  • Graviton: Custom CPU chips with 40% better price-performance than x86 processors.
  • Tranium: Custom AI silicon. Tranium 2 offers 30% better price-performance than comparable GPUs, and Tranium 3 is already nearly fully subscribed.
• Financial Outlook: While Amazon may show negative free cash flow in 2026 and early 2027 due to heavy upfront spending, the speaker projects that these investments will yield massive returns by 2028–2029. The speaker estimates a potential share price of ~$600 by 2031.

2. Investment Thesis: Meta (META)

Meta is highlighted as a "fast-growth" company with an expanding moat, currently undervalued by the market.

• Market Dominance: Meta has 3.58 billion daily active users. The speaker argues that the "Big Tobacco" comparison regarding social media's impact on society is flawed, noting that the platform provides significant connectivity and entertainment value.
• Ad Revenue Growth: Meta is projected to surpass Google in total digital ad revenue in 2026, reaching ~$243 billion. This growth is driven by AI-powered recommendation systems that have increased watch time on "Reels" by over 30%.
• AI Integration: Meta’s new AI assistant is gaining rapid traction in the App Store. The speaker notes that Meta does not need the "best" model in the world; it only needs a "good enough" model that leverages its massive distribution network to achieve scale.

3. The "Fail of the Week": AI Skepticism

The speaker addresses viral videos showing ChatGPT "failing" at simple tasks (e.g., spelling months with an 'X').

• The Reality: These videos are identified as "contrived" and "scripted." Users are utilizing custom prompts or voice-cloning tools to force the AI to act incorrectly for entertainment purposes.
• The Takeaway: Investors should be wary of anecdotal social media content that attempts to portray AI as fundamentally broken, as it often ignores the actual capabilities of the technology.

4. Portfolio Performance & Strategy

• Passive Income Portfolio: Currently valued at ~$934k. Despite a 9% year-to-date decline in 2026, the portfolio has historically outperformed the S&P 500.
• Story Fund: A more aggressive portfolio ($417k) that has significantly outperformed the S&P 500 and QQQ since inception, largely due to holdings in Google and Netflix.
• Strategy: The speaker advocates for buying high-quality "compounding machines" during market dips caused by macroeconomic fears (e.g., inflation, geopolitical conflict).

Synthesis

The core argument of the presentation is that Amazon and Meta are currently mispriced due to short-term investor anxiety. For Amazon, the market is misinterpreting necessary, high-return capex as wasteful spending. For Meta, the market is overreacting to social/legal headwinds while ignoring the company's accelerating ad revenue and massive user scale. The speaker concludes that both companies are positioned for significant long-term growth through AI leadership and vertical integration.