1. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Amazon.com Inc. (NASDAQ:AMZN) offers consumer products, advertising, and subscription services through online and physical stores. The company operates through North America, International, and Amazon Web Services (AWS) segments. It uses machine learning to personalize e-commerce experiences, provide cloud-based AI services, and also power the Alexa voice assistant.
Recently, JMP Securities analyst Nicholas Jones reaffirmed a Market Outperform rating on the company with a $285 price target because of Amazon.com Inc.’s (NASDAQ:AMZN) advertising strategies. The analyst believes in the company’s potential to attract more advertisers as it moves into retail media advertising and consequently increase the allocated budget for ads in retail media. In Q4 2024, the advertising revenue for the company improved by 18% year-over-year.
Amazon.com Inc.’s (NASDAQ:AMZN) integration of AI in the ad segment also drives its growth. Some of the company’s well-known AI-powered features and tools include the AI Creative Studio and Audio Generator, which assists creators in producing audio and visual content. Similarly, other GenAI tools help lower creative barriers for advertisers and also expand their reach. Video and Image Generators help advertisers showcase their products more effectively.
Nightview Capital is bullish on the company and stated the following regarding Amazon.com Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Artificial intelligence is no longer just a promise—it’s becoming the defining force of the modern economy. From self-driving vehicles to humanoid robotics, intelligent systems are not only enhancing efficiency but unlocking entirely new markets. These systems process and learn from vast amounts of real-world data, iterating and improving at a scale no human could achieve.
In our view, this isn’t just innovation; it’s exponential evolution. Companies leading the AI revolution are building formidable data moats, making it nearly impossible for latecomers to compete. Every mile driven by an autonomous vehicle, every task completed by an industrial robot—these actions feed a cycle of continuous improvement.
Amazon.com, Inc. (NASDAQ:AMZN): Core Opportunity: Amazon’s growth is anchored by three high-potential areas: retail margin expansion, a rapidly growing advertising business, and the continued growth and need for Amazon Web Services (AWS). Together, these pillars position Amazon for the next leg of growth and profitability.
Competitive Advantage: Retail Margin Expansion: With e-commerce still accounting for only 16% of retail sales in the United States (per the U.S. Census Bureau)—and even less globally—Amazon has significant room for growth. CEO Andy Jassy’s emphasis on AI-driven efficiencies, such as a possible 25% reduction in cost-to-serve, underscores the company’s ability to unlock new profitability in their now three-decade-old core business. More than a decade after the Kiva robotics acquisition, we see the potential for the next wave of automation to reduce variable cost per unit (VCPU) on the “pick and pack” and transportation side of the business as the decade progresses. Overall, we see EBIT margins expanding steadily throughout the next several years…” (Click here to read the full text)
While we acknowledge the growth potential of Amazon.com Inc. (NASDAQ:AMZN), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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