We recently published a list of 10 Best Stocks to Buy and Hold For The Next Decade. In this article, we are going to take a look at where Amazon.com Inc (NASDAQ:AMZN) stands against the other best stocks to buy and hold for the next decade.
Is Nuclear Energy Making a Comeback?
Nuclear plants continue to re-open, but the question stands, will the global supply be able to meet the ever-growing demand for clean energy? On October 1, Aniket Shah, Jefferies’ global head of sustainability and transition strategy, appeared in an interview on Yahoo Finance to discuss his stance on nuclear energy making a comeback amid the AI boom.
Shah shares that the nuclear energy boom is not surprising. Looking back, the United States signed significant partnerships to boost the supply of nuclear energy years ago, indicating that the value this sector holds is not unknown or recent.
He adds that the big tech companies are going to be primary catalysts and will influence the entire market. These companies will invest millions and billions in nuclear energy, making the transition easier for other companies to follow. According to Shah, some key investment areas would be small modular reactors and nuclear fusion.
Shah also acknowledged that the United States held a bipartisan view of the nuclear boom, explaining why regulations and acts in favor of nuclear energy are being passed at notoriously high speeds. While the building blocks of nuclear energy are coming together, Shah remains concerned over the execution. He highlights that the United States does not have enough skilled labor and resources to make the nuclear energy boom a reality and must work extremely hard to make it happen.
Nuclear Energy is Poised for Growth Amid AI Boom
One of the most opportunistic investment themes in 2024 is AI, the other is electrification, and both require a lot of power. The surge in power demand is in turn driving utility stocks. On October 4, Durgesh Chopra, Evercore ISI managing director, appeared in an interview on Yahoo Finance to discuss how utilities could benefit from AI-driven power demand.
Chopra highlights the biggest catalyst for companies like Vistra and Constellation Energy is data centers’ needs for a 24/7 source of clean energy. Therefore, nuclear companies must grab the opportunity and enter into long-term contracts to lock in future growth as soon as possible.
There are multiple projects in the pipeline in the United States, that add up to roughly 1.5 gigawatts of energy, positioning nuclear plants as the next big thing in energy. On the flip side, balancing supply and demand will be a key challenge for companies.
Despite the challenges, he believes that the market is well-positioned for growth in utilities. Utilities have not seen demand growth in the past decade, but things are finally changing for the sector. Overall, with inflation going down, the sector may experience significant tailwinds. Chopra also emphasized that growth in this sector will yield results in five to seven years.
Our Methodology
To come up with the 10 best stocks to buy and hold for the next decade, we sifted through multiple similar rankings and compiled an initial list of 20 stocks. We then ranked the top 10 based on their hedge fund sentiment at the end of Q2 2024.
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).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com Inc (NASDAQ:AMZN) ranks first on our list of the 10 stocks to buy and hold for the next decade. Amazon.com Inc (NASDAQ:AMZN) is a technology company that specializes in e-commerce, online retail, streaming, and data cloud services. Its e-commerce platform is functional in 20 countries and ships to over 100 countries.
The company was first launched in 1994 and is on track to capture over 40% of the e-commerce market in the United States. Its proprietary cloud service, Amazon Web Services (AWS), increased its revenue by 18.8% in Q2 and has reported 30% plus operating margins consistently for the past five quarters.
Over the past few months, the company has not only forged partnerships with AI startups and the government but it has also been actively involved in the development of AI hardware. Recent chips produced by the company include Trainium and Inferentia. On Prime Day, Amazon deployed a quarter million Graviton Chips and 80,000 custom AI chips to manage the surging activity on its platforms.
Speaking of AI, AWS is now housing the next generation of Llama models from Meta, giving customers more choices to build, deploy, and scale generative AI applications. On September 19, Amazon.com Inc (NASDAQ:AMZN) launched Project Amelia, a selling assistant backed by generative AI, allowing sellers to offer better customer assistance and reach.
Overall, AWS has close to 31% market share in cloud computing, indicative of its dominance in the market. Now that AWS is increasingly adopting AI-backed systems, the company is poised to become a fully AI-run company in the next few years.
Analysts are bullish on AMZN and their 12-month median price target of $220 points to a 20% upside from current levels. According to our Insider Monkey database, AMZN was held by 308 hedge funds at the close of Q2 2024 with total stakes amounting to $65.85 billion.
Diamond Hill Select Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Among our top individual contributors in Q2 were Amazon.com, Inc. (NASDAQ:AMZN), Texas Instruments and Mr. Cooper Group. Internet retail and cloud infrastructure company Amazon is benefiting from strong profitability, particularly in its Amazon Web Services (AWS) business. Shares also received a boost amid growing optimism around the demand for AWS as Amazon customers’ investments in generative AI projects continue growing.”
Overall, AMZN ranks 1st among the 10 stocks to buy and hold for the next decade. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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.
