The Best and Worst Dow Stocks for the Next 12 Months

4. Amazon.com Inc. (NASDAQ:AMZN)

Upside Potential: 38.4%

Market Cap: $1.92 trillion

Number of Hedge Fund Holders: 339

Amazon.com Inc. (NASDAQ:AMZN) is involved in retail e-commerce, content subscription services (Prime Video), advertising, and cloud computing. The company’s product offerings through its online and offline stores include merchandise and media content acquired for resale and products from third-party sellers. Additionally, Amazon.com Inc. (NASDAQ:AMZN) operates one of the largest data center networks globally through its Amazon Web Services (AWS) division. AWS provides a comprehensive suite of cloud services, including computing power, storage options, and networking capabilities, catering to a diverse range of customers from startups to large enterprises.

Despite the correction in the Magnificent Seven stocks, Amazon remains a consensus Buy. Analysts still expect the stock to reach $250 in one year, implying over 38% upside potential. In their “Alger Spectra Fund” Q1 2025 investor letter, portfolio managers at investment management company Fred Alger Management highlighted the underperformance of Amazon in Q1 because of tariff concerns and subsequent increase in operational costs and impact on consumer spending. They also highlighted softer Q1 sales guidance and high cloud and AI capex impact on profitability as the reason for the underperformance.

Despite this, the portfolio managers maintained their confidence in Amazon.com Inc. (NASDAQ:AMZN), driven by its strong fundamentals. The company continues to derive strength from its diversified business model and product and service innovation. They also highlighted the company’s dominant position in high-growth areas like e-commerce and cloud computing as the reason for their optimistic view.

On April 25, William Blair analyst Dylan Carden reaffirmed his Buy rating on the company as he believes Amazon.com Inc. (NASDAQ:AMZN) is better positioned to handle the ongoing challenges.