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Analyst: Amazon.com (AMZN) ‘Going To Take The Baton’ This Year Amid Strong Growth Catalysts

We recently published a list of Top 10 AI Stocks Buzzing on Latest News. In this article, we are going to take a look at where Amazon.com Inc (NASDAQ:AMZN) stands against other top AI stocks buzzing on latest news.

Investors are continuing to assess the impact of new LLMs in the AI industry. X. Eyeé, CEO of AI consulting firm Malo Santo and senior policy advisor at the Goldman School of Public Policy at UC Berkeley, said in a recent program on CNBC that the DeepSeek breakthrough in China has changed the dynamics of the AI race. She believes AI development is no longer limited to the companies with the “largest pockets.”

“I mean, the world has long looked to the United States to be the leader in artificial intelligence, but these recent model releases from China have demonstrated its ability to leapfrog and catch up with us tech giants and achieve groundbreaking results without the luxury of advanced hardware, which is ultimately challenging everything that we thought was necessary for innovation in the AI space. See, what DeepSeek represents is that AI innovation isn’t necessarily driven by the companies with the largest pockets or the fanciest hardware, but that collaborative development approaches can actually end up providing market-leading technologies.”

READ ALSO 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In

For this article, we picked 10 AI stocks making the biggest moves these days. With each stock we have mentioned the number of hedge fund investors. 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 Investors: 286

Robert Schein, Chief Investment Officer at Blanke Schein Wealth Management, said in a latest program on CNBC that Amazon.com Inc (NASDAQ:AMZN) will lead the Mag. 7 group this year amid several growth catalysts:

“Amazon.com Inc (NASDAQ:AMZN) really going to take the baton this year, and there are several reasons for that. We see continued operating margin expansion—last quarter was up 11%, recovering from a low of 2% at the end of 2022. They’re also leaning into faster-growing, higher-margin segments like AWS and advertising. Then, when we factor in and layer on another segment, which is the AI business, that could grow potentially three times faster than what we would see in just the AWS side alone. So, we expect 20% earnings growth from Amazon.com Inc (NASDAQ:AMZN) over the next five years for that reason.”

Despite weak guidance, Amazon could easily surpass $100 billion in operating income within the next two years because of its AWS growth engine. In the latest quarter, Amazon Web Services sales jumped 19% and operating profit for the segment jumped 62% in 2024 on an annual basis.

The market is currently forecasting $6.27 per share in profits this year (a 13% YoY growth) and $7.59 per share next year (a 21% YoY growth). Amazon’s stock is priced at a profit multiple of 30.2x. This valuation might look rich, but when we incorporate AWS growth, the stock seems to have more upside potential.

Ariel Appreciation Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:

During the quarter, we initiated three new investments, each in companies we have followed closely for a considerable time. At various points, we viewed them as missed opportunities; however, our experience with Mr. Market has taught us that patience often creates inevitable entry points. This quarter, some exciting opportunities presented themselves. The three investments are Amazon.com, Inc. (NASDAQ:AMZN), Diageo (NYSE:DEO), and Uber (NASDAQ:UBER). We will discuss each in detail below.

Amazon is one of the most widely followed companies in the world. While the “Magnificent 7” (of which Amazon is a key member) is often seen as a runaway freight train, we were able to purchase Amazon shares at prices last seen in 2021—three years ago. How is this possible if the “Mag7” has been so dominant? We believe it largely reflects the increasing prevalence of narratives driving market sentiment…” (Click here to read the full text)

Overall, AMZN ranks 1st on our list of top AI stocks buzzing on latest news. While we acknowledge the potential of AMZN, our conviction lies in the belief that under the radar 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.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

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In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

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