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AM and PM are style guide specific
AM PM
A.M. P.M.
Small caps (Not simply smaller font as is here)
AM PM
A.M. P.M.
a.m. p.m. Chicago & AP, but they may have small spaces.
am pm Common in British & Irish English material (saves ink?).
The New Penguin Dictionary of Abbreviations (pub 2000) is only about meaning, not style (no guidance) and has AM, PM and a.m., p.m., but not A.M. P.M., am or pm in the list.
In general using small caps is more common in USA publications for things like NASA, FBI, FM etc and in the UK it tends to be only for first word or phrase at a chapter start. Personally I think Drop Caps & SMALL CAPS are a bit of an affectation in paper print and slow reading, the drop caps are especially bad, so we never put them in ebooks and often edit them out on PD texts. Simpler is always better.
What ever you do, do it consistently.
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