10 Best Cloud Stocks To Buy According to Short Sellers

5. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Investors  in Q2 2024: 308

Short Interest as % of  Shares Outstanding: 0.77%

Amazon.com, Inc. (NASDAQ:AMZN) is a technology focused firm known for its strong presence in the cloud computing and the eCommerce industries. More than 80% of its revenue is from eCommerce, which means that the typical drivers of eCommerce valuation are also relevant for the company. These include reducing delivery times and growing its premium membership services. Additionally, Amazon.com, Inc. (NASDAQ:AMZN) is also the world’s biggest cloud computing company in terms of market share. As per Gartner, the firm controls 39% of the cloud market through its AWS business division. This introduces a high margin revenue stream for Amazon.com, Inc. (NASDAQ:AMZN). AWS has an operating margin of 24% as per Amazon.com, Inc. (NASDAQ:AMZN)’s latest financial results, which is 20 percentage points higher than its North American eCommerce operations’ margin of 3.8% and the overall margin of 5.7%. Through AWS and its broader technology focus, the firm is also concentrating on all three layers of the AI stack. Amazon.com, Inc. (NASDAQ:AMZN) benefits from its access to the Claude AI foundational model too, and its eCommerce market share provides it with a wide moat.

Patient Capital mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter. Here is what the fund said:

“Amazon.com Inc. (AMZN) moved higher throughout the second quarter as AI demand helped to reaccelerate growth in their AWS business. It looks as though the cloud business is finally past the customer cost optimization period with customers restarting their cloud migrations as well as expanding spend on AI projects. Despite the top and bottom-line improvement seen in the first quarter, the company is significantly underearning its long-term potential as it continues to reinvest aggressively in the business. With 80% of global retail sales still being done in physical stores and 85% of global IT spending still on-premises, we see a long-run way for the dominant player in the cloud, retail, and increasingly logistics and advertising space.”