Goldman Sachs’ Top 5 Stock Picks for 2024

3. Amazon.com, Inc. (NASDAQ:AMZN)

Goldman Sachs’ Q4 2023 Investment Value: $8.09 billion

Number of Hedge Fund Holders: 293

Amazon.com, Inc. (NASDAQ:AMZN), a leading American multinational technology company, boasts a diverse portfolio spanning e-commerce, cloud computing via Amazon Web Services (AWS), online advertising, digital streaming, and artificial intelligence. Its e-commerce platform offers a wide array of products, from gourmet food to consumer electronics.

Insider Monkey’s database, monitoring 933 elite hedge funds, indicates a favorable sentiment towards Amazon.com, Inc. (NASDAQ:AMZN) in Q4. The number of hedge funds with investments in the stock increased to 293, up from 286 in the previous quarter.

Alphyn Capital Management stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its first quarter 2024 investor letter:

“My previous analysis (Q4 2022 letter) highlighted the significant growth in Amazon.com, Inc.’s (NASDAQ:AMZN) fulfillment expenses since 2015, masking the true earnings potential of its retail business. Though initially costly, the recent restructuring into regional fulfillment centers has yielded lower fulfillment costs and faster shipping times, leading to increased purchase frequency, especially among Prime members.

Following the regionalization effort, over the last couple of years, Amazon prioritized cost control and reduced capital expenditures. At a high level, the North American segment’s operating income swung from a $240 million loss in 2022 to a healthy $6.4 billion profit (6% margin) in 2023. Combined with continued strength in AWS and advertising, Amazon’s free cash flow (as reported, excluding equipment finance leases and principal repayments) surged from negative $13 billion to positive $36 billion.

Amazon stands out for pioneering the public market strategy of prioritizing long-term growth through sustained low margins and reinvestment, with the ability to later “turn on the taps” for profit. While many public tech companies have tried to replicate this approach, Amazon’s scale and execution capabilities make it one of the few that have successfully pulled it off.”