We recently compiled a list of the 17 Latest AI News and Analyst Ratings You Should Not Miss. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against the other AI stocks under hedge funds’ radar.
It is no surprise that companies in the United States and China are leading the rest of the world when it comes to artificial intelligence. Conservative estimates about the impact of AI on the global economy, made by market experts at professional services firm PwC, reveal that AI-related gains, equal to close to $11 trillion, will account for nearly 70% of total global economic impact by 2030. In China, AI is expected to contribute to a nearly 26% boost to the GDP within the next six years, while this figure in the US will likely be 15%. AI no doubt represents the biggest commercial investment opportunity in this fast-paced world economy.
Smart companies are seizing on this opportunity. According to market research firm IDC, investments in AI infrastructure will cross $30 billion this year and are projected to grow to $47 billion by 2028. This represents approximately 30% of the total global spending in AI. One of the most prominent AI use cases is in the customer service world. In this area, global businesses have spent more than $16 billion in 2024 so far. The impact of these investments in AI will be significant down the road. AI is likely to contribute to a $15 trillion boost to the global economy by 2030, up 14% from current levels.
Like other sectors of the economy, Wall Street is no stranger to AI. The debut of ChatGPT in November 2022 marked the beginning of the AI revolution in the world of finance. Since then, according to the International Monetary Fund (IMF), sales of software, hardware, and services for AI systems have climbed rapidly and will top $400 billion in 2027. Financial sector spending is likely to double to nearly $100 billion in 2027, with a compound annual growth rate of close to 30% — the fastest of five major industries. Hedge funds, often the pioneers of cutting-edge technology, are embracing generative AI as well.
Our Methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in the ecommerce business. As it prepares to integrate AI into Amazon Web Services (AWS), one of the biggest cloud computing operations in the world, the tech firm has continued to invest in other AI ventures, most notably the $4 billion investment in California-based startup Anthropic earlier this year. The latter is a rival of OpenAI of ChatGPT fame. Under the terms of the agreement, the startup will use AWS as the primary cloud provider as it uses Amazon chips to build, train, and deploy generative AI models. Authorities in the United Kingdom are reviewing this deal to determine if it violates business competition rules.
Amazon.com, Inc. (NASDAQ:AMZN) has been a Wall Street darling for many years. The past few weeks are no exception. Citigroup recently reiterated a Buy rating on the stock with a price target of $245, noting that the firm delivered a strong second quarter as AWS revenue growth was accelerating, faster shipping times were improving conversion rates, and overall cost-to-serve costs were declining. The advisory further added that as the company incorporated AI across services, it was on track to deliver continued growth and margin expansion such that the third quarter operating income guide could prove conservative.
Overall AMZN ranks 3rd on our list of the best AI stocks to buy. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some 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 AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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