We recently published a list of 8 Best Robinhood Stocks to Buy According to Analysts. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other best Robinhood stocks to buy according to analysts.
Morgan Stanley Wealth Management has announced quarterly retail investor pulse survey results. The majority of investors’ views were bullish. Investors began the year on the bullish (58%) note, in line with last quarter (59%). Furthermore, the results also revealed that around 2 out of 3 investors (64%) saw the market rising by the end of the quarter.
What’s On Retail Investors’ Minds?
Morgan Stanley Wealth Management’s survey revealed that inflation has been the top worry for investors’ portfolios at 45%, almost in line with the last quarter at 46%, with market volatility at 24% coming out to be the second. Notably, the concerns related to the new administration declined 13 percentage points since the last quarter. Furthermore, around 3 out of 5 (59%) of investors see that the broader US economy remains healthy. Chris Larkin, Managing Director, Head of Trading and Investing, E*TRADE from Morgan Stanley, stated that with any new administration taking power, the potential policy changes can bring uncertainty in the broader markets. That being said, investors are optimistic and resilient amid a soft start to the new year.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Current Trends in Retail Investing
Retail outflows from the US equities increased to ~$4 billion over the previous 2 weeks due to the uncertainties related to tariffs and increased economic concerns, which resulted in a strong pullback in the S&P 500, reported CNBC, while quoting data from Barclays. Rob Austin, director of research at Alight Solutions, says that if people tried to buy the dip, there would have been evidence hinting at the increased buying of the large-cap equities. On the contrary, people are selling large-cap equities. Austin believes that this seems to be a bit of a reactionary trading activity.
CNBC, while highlighting the comments made by Venu Krishna (Barclays head of U.S. equity strategy), reported that there remains sufficient capacity for the retail investors to further disengage from the broader equity market. Notably, Barclays’ proprietary euphoria indicator exhibited that the sentiments are down to the levels that were seen around the time of the US election back in November, but remain elevated by historic standards. The increased sell-off came as American households remained more sensitive than ever to the significant volatility in the broader equity markets.
Our Methodology
To list the 8 Best Robinhood Stocks to Buy According to Analysts, we sifted through several online rankings to shortlist the stocks trending on Robinhood. We also took help from the Robinhood Investor Index. Next, we chose the ones that analysts see significant upside to. Finally, the stocks were arranged in ascending order of their average upside potential, as of March 17. We also mentioned the hedge fund sentiment around each stock, as of Q4 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
Average Upside Potential: ~41.7%
Number of Hedge Fund Holders: 339
Moody’s Ratings changed Amazon.com, Inc. (NASDAQ:AMZN)’s outlook to positive from stable, reflecting the company’s continued improvement in operational performance as it managed to generate significant FCF in a bid to support acceleration in capital spending while also maintaining low leverage and increased cash balances. Amazon.com, Inc. (NASDAQ:AMZN) has a powerful global brand, which remains synonymous with online retail, and possesses the strength and profitability of Amazon Web Services, which is the market segment leader in the cloud computing market. Moody’s believes that the company remains well-placed to support the increased capital investment with internal cash flow as it ramps up its capital spending on AWS and its generative Artificial Intelligence investments.
Amazon.com, Inc. (NASDAQ:AMZN)’s investments in AI technology can fuel strong growth and efficiency improvements throughout its various business segments. In e-commerce, AI could enhance personalization, improve demand forecasting, and can also optimize logistics, resulting in better customer experiences and lower costs. Furthermore, for AWS, AI innovations can result in the development of new, high-value cloud services, bringing in more enterprise customers as well as premium pricing. Also, in advertising, AI-powered tools can result in improved ad targeting and effectiveness.
Diamond Hill Capital, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Among our top individual contributors in Q4 were General Motors and Amazon.com, Inc. (NASDAQ:AMZN). Internet retail and cloud infrastructure company Amazon continues taking share in non-discretionary categories. Retail margins also increased in the quarter, particularly international margins. Amazon Web Services’ (AWS) revenue growth accelerated in the quarter, and, despite increased AI-related capital expenditures, margins improved to all-time highs.”
Overall, AMZN ranks 1st on our list of best Robinhood stocks to buy according to analysts. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued 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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