The S&P 500 jumped 110% over the past decade, but all five FAANG stocks generated even bigger returns. Apple and Amazon (AMZN -1.54%) led the way with gains of 660% and 560%, respectively. Alphabet finished in the middle of the pack, up 328%. And Netflix (NFLX -0.95%) and Meta Platforms brought up the tail, climbing 250% and 169%, respectively.

All five companies are still a force to be reckoned with, but that doesn't mean all five will beat the market over the next decade. With that in mind, here is one FAANG stock to buy now and one to avoid.

The case for Amazon

Supply chain issues and rising costs have hit Amazon hard. Management estimated that inflationary pressures added $2 billion in incremental costs during the most recent quarter, and excess fulfillment capacity added another $2 billion. To add, high inflation was also a headwind to discretionary consumer spending. As a result, revenue rose just 14% over the past year, and Amazon generated negative free cash flow (FCF) of $24.6 billion.

Those results are far from ideal, but investors have overreacted to short-term problems. Inflation will normalize in time, and Amazon has a plan for its excess fulfillment capacity. Buy with Prime is a new service that gives third-party merchants access to Amazon's fulfillment services, extending the benefits of the Prime membership program (like fast, free checkout) beyond the Amazon marketplace.

More broadly, Amazon has an ironclad lead in two growing industries: e-commerce and cloud computing. Amazon operates the world's most-visited online marketplace, which will power nearly 40% of online retail sales in the U.S. this year, according to eMarketer. And global e-commerce sales are expected to grow at 11% annually to reach $7.4 trillion by 2025, meaning Amazon's retail business still has plenty of room to run.

Additionally, research company Gartner once again recognized Amazon Web Services (AWS) as the top cloud platform last year, citing its status as the industry's innovation leader. To put its leadership in context, AWS held 33% market share in cloud infrastructure services in the first quarter, more than Microsoft and Alphabet combined.

That bodes well for the future. AWS' operating margin typically clocks in around 30%, making it far more profitable than Amazon's retail business. Better yet, AWS is also growing more quickly and that trend is likely to continue as the broader cloud computing market is expected to grow 16% per year to reach $1.6 trillion by 2030. To that end, AWS should supercharge Amazon's profitability in the years ahead.

Currently, the stock is 38% off its high, trading at 2.5 times sales, near its cheapest valuation in the last five years. That looks like a bargain, and it's why this FAANG stock is a screaming buy.

The case against Netflix

Streaming pioneer Netflix has revolutionized entertainment, providing viewers with a more convenient alternative to traditional television. Netflix has further distinguished itself with original content. Binge-worthy titles like Stranger Things and Squid Games have captivated audiences around the world, and Netflix currently owns seven of the top 10 original series, according to Nielsen.

Thanks to that competitive edge, the company wields a certain amount of pricing power. The average monthly membership cost $11.77 in the last quarter, up 2% from the prior year. But no company has unlimited pricing power, so subscriber growth is still an essential part of the equation. Unfortunately, Netflix lost 200,000 subscribers in the first quarter, marking its first loss in more than a decade. Worse, the company expects to lose another 2 million subscribers in the second quarter.

Not surprisingly, Netflix has posted somewhat lackluster financial results over the past year. Revenue rose just 15% and the company generated negative FCF of $27 million, down from positive FCF of $2.5 billion in the prior year.

To its credit, Netflix is not sitting still. CEO Reed Hastings discussed the possibility of a cheaper, ad-supported tier during the last earnings call. In fact, Netflix told its employees an ad-supported service could launch as soon as this year, according to The New York Times. That could certainly reenergize subscriber growth, but I'd like to see some evidence before buying the stock.

As a point of clarification, I'm not suggesting current shareholders should sell. Netflix is a great company with a strong position in the growing streaming industry, and shares may eventually rebound from their 73% plunge. But at the current time, I think investors should hold off on starting (or adding to) a position in this stock.