1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) is one of the largest e-commerce and technology companies in the world. Amazon, functional in more than 20 countries, entered the e-commerce space in 1994 and now ships to more than 100 countries and regions. Amazon’s (NASDAQ:AMZN) customers include small to medium-sized businesses and mass consumers. Other than e-commerce, the company also specializes in cloud services, artificial intelligence, and digital streaming.
Amazon.com, Inc. (NASDAQ:AMZN) is one of the largest e-commerce companies in the United States, holding 37.6% of e-commerce sales, the highest among all its competitors. It has a unique business model, under which its retail segment in North America and Internationally made $352.8 billion and $131.2 billion in revenue respectively, for the fiscal year ended 2023 (inclusive of advertising and subscription revenue).
The company’s economic moat lies in its strong e-commerce infrastructure that allows consumers to meet all their shopping needs under one roof. The website, Amazon.com, is optimized such that customers can make purchases in less than 3 minutes and choose from over 300 million products including electronics, clothing, home appliances, and furniture. New tech features such as Amazon Lens and the Amazon AI shopping assistant have also enabled faster shopping.
The company’s delivery times are also exceptional. In March this year, 60% of prime members received their orders on the same day or the next day in the largest metro areas in the United States. On July 30, Amazon (NASDAQ:AMZN) reported that, so far this year, the company has delivered almost 5 billion items on the same day or the next globally, up by 30% year-over-year.
In 2023, brand owners grew their sales by over 22%, and over 4.5 billion items were sold in the US. Overall, Amazon expects consumer activity to grow in 2024 as it spends more to improve its e-commerce infrastructure and simplify the customer journey.
Analysts are bullish on AMZN and their 12-month median price target of $220 points to a 22% upside from current levels. Overall, AMZN was held by 308 hedge funds at the close of Q2 2024 with total stakes amounting to $65.85 billion. As of June 30, Fisher Asset Management was the largest shareholder with a position worth $8.46 billion.
Diamond Hill Capital’s Diamond Hill Select Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Among our top individual contributors in Q2 were Amazon.com, Inc. (NASDAQ:AMZN), Texas Instruments and Mr. Cooper Group. Internet retail and cloud infrastructure company Amazon is benefiting from strong profitability, particularly in its Amazon Web Services (AWS) business. Shares also received a boost amid growing optimism around the demand for AWS as Amazon customers’ investments in generative AI projects continue growing.”
While we acknowledge the potential of AMZN to grow, 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 NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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