1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 286
Dan Niles of Niles Investment Management was recently asked on Schwab Network what tech stocks in the Mag. 7 group he likes. Niles said he likes Amazon.com Inc (NASDAQ:AMZN) for a variety of reasons:
“Amazon looks good—it was one of our top five picks coming into this year. If you look at this last quarter, they really beat across the board, whether it was revenues or margins, whether it was AWS or their e-commerce business; they were doing very, very well. At the Amazon.com Inc (NASDAQ:AMZN) Invent conference they had recently, the business sounded really good with some of the initiatives they had going on with Amazon Web Services and some of the new chips they were developing. I think Amazon, when you look at it, looks like they’re going to still be able to gain share and still should have more margin expansion available to them, especially in international markets. They’re using AI relatively well internally in terms of recommending what products you may want to buy, etc. When you look at the MAG7, it’s probably one of the better ones in there in terms of where they still have strength.”
Meridian Hedged Equity Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a leading e-commerce company that operates a vast online marketplace for third-party sellers, sells its own products, and provides cloud infrastructure services through Amazon Web Services (AWS). We own Amazon because we believe AWS and advertising will continue to drive long-term revenue growth and profitability improvements. Although the stock didn’t perform well this quarter, we attribute this to a mix of short-term factors, including macroeconomic headwinds impacting consumer and enterprise spending, slowing retail revenue growth, and retail margin expansion falling short of market expectations. Additionally, increased investment in longer-term initiatives like satellite broadband and other experimental projects put further pressure on margins. Despite weaker-than-expected third-quarter guidance, we believe Amazon’s long-term growth story remains strong. We see multiple levers for improved profitability and free cash flow generation over time. We maintained our position in the company during the period.”
While we acknowledge the potential of Amazon.com Inc (NASDAQ: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.
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