1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 302
Analysts at Wolfe Research believe Mag. 7 stocks like AMZN will perform well even during the expected volatility this summer.
Amazon.com Inc (NASDAQ:AMZN) is one of the stocks Dan Ives of Wedbush thinks have the potential to grow based on the AI revolution.
Investment firm UBS in a latest report named Trainium and Inferentia as Amazon.com Inc’s (NASDAQ:AMZN) strengths in the AI Enabling layer to profit from the $1.16 trillion opportunity. Trainium is a machine learning (ML) chip that AWS purpose-built for deep learning (DL) training of 100B+ parameter models. Inferentia is an AI accelerator for deep learning (DL) and generative AI inference applications.
Amazon Web Services is another major factor that makes Amazon.com Inc (NASDAQ:AMZN) well positioned in the Enabling layer of the AI value chain. However, UBS believes Amazon.com Inc (NASDAQ:AMZN) doesn’t have any offering in the Intelligence layer of the AI value chain. The firm labeled “chatbot recommendations” as Amazon.com Inc’s (NASDAQ:AMZN) strength in the application layer of AI.
Amazon.com Inc (NASDAQ:AMZN) is becoming an AI power house thanks to its AWS business, which saw operating margins cross 37% during the first quarter. AWS operating margins have now came in more than 30% for the past five straight quarters. Amazon.com Inc’s (NASDAQ:AMZN) revenue in the first quarter jumped 12.5% YoY and its adjusted EPS more than tripled. Revenue in North America and International segments grew as well. Analysts believe digital ads is another strong revenue stream for Amazon.com Inc (NASDAQ:AMZN), with revenue from the segment increasing 24% YoY to $11.8 billion in the first quarter.
Meridian Hedged Equity Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its first quarter 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) reported a strong quarter. Its focus on streamlining its fulfillment network through regionalization efforts has yielded significant cost savings and efficiency gains. These improvements, coupled with strategic investments in automation and robotics, are expected to further enhance margins and profitability in the coming quarters. We believe the set-up for margin expansion over the coming years is compelling. Driven both by efficiency gains and growth in more profitable businesses like advertising, Amazon continues to invest strategically in innovation and expansion initiatives. These include advancements in artificial intelligence and machine learning, hello the development of new fulfillment centers and delivery stations, and the expansion of Prime services and digital content offerings. We believe these strategic investments are laying the groundwork for sustained growth and market leadership in the years to come and continue to hold shares in Amazon as an unhedged position.”
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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