1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 302
Amazon.com, Inc. (NASDAQ:AMZN), known for its e-commerce dominance, has expanded far beyond online retail. This multinational technology company has a diverse portfolio that includes cloud computing, online advertising, artificial intelligence, and streaming services.
Amazon.com, Inc. (NASDAQ:AMZN) announced a stellar first quarter in 2024, exceeding analyst expectations. Net sales rose 13% year-over-year to $143.3 billion, highlighting strong overall growth. Amazon Web Services (AWS), the company’s cloud computing arm, remained a key driver of this success.
AWS revenue grew an impressive 17% year-over-year, reaching $25 billion. Operating income for AWS also jumped significantly, reaching $9.4 billion compared to $5.1 billion in Q1 2023. Profitability across the entire company improved markedly as well. Operating income grew to $15.3 billion from $4.8 billion in Q1 2023. This strong performance translated to a doubling of net income, reaching $10.4 billion ($0.98 per diluted share) compared to $3.2 billion ($0.31 per diluted share) in Q1 2023.
Analysts are bullish on Amazon.com, Inc. (NASDAQ:AMZN), assigning an average “Strong Buy” rating to the stock. The average 12-month price target for Amazon.com, Inc. (NASDAQ:AMZN) sits at $221.55, suggesting a potential upside of over 11% from the current price levels.
Here’s what Mar Vista Investment Partners, LLC said about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is experiencing a surge in profitability, reflected in significantly higher retail profit margins. Strategic cost reductions in headcount and fulfillment have materialized into financial gains. While the unexpected pandemic-driven demand surge necessitated a rapid expansion of fulfillment infrastructure, this initially impacted operating profits. However, current unit sales growth has effectively reached equilibrium with fulfillment capacity. This balance is leading to positive adjustments to both earnings and intrinsic value estimates. Should the economic climate continue to improve, we believe Amazon’s investment potential aligns with its projected 15-20% intrinsic value growth trajectory.”
While we acknowledge the potential of Amazon.com as an investment, our conviction lies in the belief that 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 Amazon but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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