1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) offers advanced tools for AR and VR developers through its Amazon Web Services (AWS) platform. The company also provides AR/VR platforms such as Room Decorator, which allows users to visualize various furniture pieces in their space, and Virtual Try-On, which lets users see how clothing might look on them.
Amazon.com, Inc. (NASDAQ:AMZN)’s AWS business is rapidly becoming a powerhouse in artificial intelligence, with operating margins exceeding 37% in the first quarter, 8 percentage points higher than the fourth quarter of the past year and around 10 percentage points above the annual average margin since 2018.
In the first half of 2024, Amazon.com, Inc. (NASDAQ:AMZN)’s operating income soared 141% year-over-year, reaching a record high. The bulk of this profit came from Amazon Web Services, which accounted for 84% of the company’s second-quarter operating profit. Given AWS’s position as a top cloud platform, industry projections indicate annual growth of 15% to 21% through 2028, making Amazon’s performance a key factor in profit forecasts.
Insider Monkey’s research for the March quarter of 2024 showed that 308 out of the 912 hedge funds tracked held stakes in Amazon.com, Inc. (NASDAQ:AMZN). The largest hedge fund investor was Ken Fisher’s Fisher Asset Management, with a stake valued at $8.46 billion.
Patient Capital Opportunity Equity Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) moved higher throughout the second quarter as AI demand helped to reaccelerate growth in their AWS business. It looks as though the cloud business is finally past the customer cost optimization period with customers restarting their cloud migrations as well as expanding spend on AI projects. Despite the top and bottom-line improvement seen in the first quarter, the company is significantly underearning its long-term potential as it continues to reinvest aggressively in the business. With 80% of global retail sales still being done in physical stores and 85% of global IT spending still on-premises, we see a long-run way for the dominant player in the cloud, retail, and increasingly logistics and advertising space.”
While we acknowledge the potential of AMZN, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the stocks mentioned on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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