We recently published a list of 10 Most Buzzing Stocks To Buy Now. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against the other buzzing stocks.
Stock Market Volatility
September and October tend to be the most volatile months for the stock market, particularly during election years. This was recently discussed by Sam Stovall, the chief investment strategist at CFRA Research, who expects the volatility to stay until the end of October.
Stovall says that while the S&P 500 recovered all its 2022 bear market losses by January this year, and reached 22 new all-time highs by March, equities have digested some of these gains and experienced sector rotation away from 2023 high flyers into more defensive areas of the market. Hence, the year started great, but the markets are declining once again. The S&P 500’s average volatility in October 2023 was 35% higher than the average for the remaining 11 months of the year.
Investors are concerned that the Fed will be slower to lower interest rates while inflation remains sticky and GDP growth begins to cool. Stovall expects three 25-basis point cuts this year, followed by another four in 2025. He thinks that while a 50 basis point cut is rare since it only ever happened twice, in 2001 and then 2007, it is still not unlikely given that the economy is worse than expected.
According to Stovall, investors need to be prepared for this increased volatility as the market digests the Fed’s actions and the potential impact on the economy. The market will likely remain uncertain until the Fed can find the right balance between slowing down the economy and stopping inflation, without causing a recession.
Tom Lee, Fundstrat Global Advisors managing partner and head of research, is of a similar idea, suggesting that investors should remain cautious over the next 8 weeks, due to both uncertainty surrounding elections and the September cuts. He says that the stock market may experience a 7-10% pullback, considering there have already been two 7% corrections this year.
Lee thinks at least a 5% pullback can be anticipated, but if it’s only 1-2%, then that’s negligible. But despite the recommended caution for the 8 weeks starting September, he thinks the volatility does not translate into a tough full-year. He views this pullback as a buying opportunity, believing that the market has not yet reached its peak for 2024.
As Lee encourages investors to be ready to buy the dip, we are here with a list of the most buzzing stocks to buy now.
Note: All price/volume data is as of September 6.
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)
Volume: 28.588M million
Average Volume (3-Month): 42.624 million
Number of Hedge Fund Holders: 308
Amazon.com Inc. (NASDAQ:AMZN) specializes in e-commerce, online retail, streaming, and data cloud services. The e-commerce platform works in 20 countries and ships to over 100. Its global cloud platform operates under the name of Amazon Web Services (AWS).
It captures over 40% of the e-commerce market in the US. AWS increased its revenue from 18.8% year-over-year in Q2 2024. The overall company revenue in the second quarter was $147.98 billion, representing a 10.12% year-over-year improvement. However, there was a loss per share of $1.26 in this period.
AWS is projected to grow annually by 15% to 21% through 2028, making its performance a crucial factor in future profit forecasts.
Over the past months, the company partnered with AI startups like Anthropic and signed deals with the US government to test new AI models.
In July, it processed a new server design, similar to the ones produced by NVIDIA. It has invested in hardware for long, considering that its non-AI computing chip, Graviton, has been under development for almost a decade. More recent chips by the company include Trainium and Inferentia. On Prime Day, Amazon.com, Inc. (NASDAQ:AMZN) deployed a quarter million Graviton Chips and 80,000 custom AI chips to manage the surging activity on its platforms.
In August, it launched Room Decorator, which allows users to visualize various furniture pieces in their space. Commitment to such advancements is a testament to the company’s long-term growth, making it a top buzzing stock.
It should benefit from the early-September expected rate cuts by the US Federal Reserve. Even the slightest reduction in borrowing costs should support the consumer purchasing power.
Amazon.com, Inc. (NASDAQ:AMZN) is held by 308 hedge funds, of which the highest stake is valued at $8,460,561,806 by Fisher Asset Management.
Ithaka US Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Founded in 1994, Amazon.com, Inc. (NASDAQ:AMZN) has evolved from its early roots as an online bookstore to become one of the world’s largest eCommerce retailers. At the end of 2023 Amazon stood poised to capture ~40% of all US e-commerce sales, representing five times more share than the next closest competitor. In addition to eCommerce, Amazon Web Services (“AWS”) has become the market leader in outsourced cloud infrastructure. Further, Amazon Advertising is garnering significant share in digital advertising, particularly product placement ads, thanks to consumers beginning their product searches on Amazon’s site. Amazon’s stock appreciated on the back of stabilization of the company’s cloud computing segment and increased confidence management would be able to contain expenses and push operating margins above prior peaks in the near-to-medium term.”
Overall AMZN ranks 1st on our list the most buzzing stocks to buy. While we acknowledge the growth potential of AMZN as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high 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.