Streep is nominated for the same Oscar for her role as Margaret Thatcher in The Iron Lady, while Davis is nominated for The Help.
Asked if she would prefer Davis to win, Streep told The Sun: "Yes, oh yes. I love her and think she's amazing.
"She deserves [it] and should be at the forefront of our business. She's a friend and we've worked together and I'm really fond of her. So we want the best for our friends. Honestly."
Speaking of her role in The Iron Lady, she added: "As I researched [Thatcher's] life I was so interested to find that in most social issues she was way, way, way to the left of any American conservative.
"She was pro-choice, she recognised global warming early on, she accepted and would never not allow the right to healthcare from birth throughout life that every Briton has enjoyed since 1948 - she never attempted to dismantle that.
"What she did dismantle was the telephone company, the light, the heat, the transport - everything owned and managed by the state. I remember in 1979 I went to England to make a movie and it took us six months to get a telephone - we got the phone a month after we left."
Streep has already won a Golden Globe and a BAFTA for her role as Thatcher in The Iron Lady. She has also won two previous Academy Awards in 1979 for Kramer vs Kramer and in 1982 for Sophie's Choice.
Both Streep and Davis were Oscar-nominated for their roles in Doubt in 2008.
Denzel Washington recently predicted that Davis will win the 'Best Actress' Academy Award for her role in The Help.
Watch a trailer for The Help below: