Bill Miller: Facebook's Total Addressable Market Is In The Hundreds Of Billions, But Amazon's Is In The Trillions

Investors that are debating between owning shares of Facebook Inc (NASDAQ: FB) or Amazon.com, Inc. (NASDAQ: AMZN) may find it beneficial to compare the total addressable market of each company.

Bill Miller, the founder of LMM, was a guest on CNBC's "Squawk Box" segment on Thursday and argued that while Facebook's TAM of $500 billion–$600 billion is large, it falls well short of Amazon's TAM.

Talking About TAM

Miller said that the TAM for Amazon's AWS segment alone is in the "trillions of dollars." In addition, Amazon also targets the $5 trillion U.S. retail market, which explains why the fund manager is confident in Amazon's outlook and the stock representing a big position in his fund.

Miller went on to defend Amazon against one of the most common thesis against owning the stock, which is the appearance of never-ending spending and investments. For example, the company plans on spending around $1.5 billion in an air cargo hub in the state of Kentucky, which will eventually hold 40 Amazon Prime airplanes and thousands of employees.

Miller argued that Amazon may be happier shipping products through FedEx Corporation (NYSE: FDX), but the fact is this logistically can't be done as delivery services lack the capacity to handle a surge in orders.

Miller further added that he spoke with Amazon's CEO Jeff Bezos after these investments, and the executive said he is "highly confident he could earn well above his cost of capital."

Finally, he pointed out that Amazon's gross margins are now higher than its biggest rival Wal-Mart Stores Inc (NYSE: WMT), which will now have a "hard time catching up online," although he also acknowledged Wal-Mart is a fierce competitor and isn't going away.