4. Amazon.com, Inc. (NASDAQ:AMZN)
Percentage of holdings in the fund: 3.55%
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) initially aimed to reach net-zero carbon emissions by 2030 and power its operations with 100% renewable energy, a goal it claims to have achieved seven years ahead of schedule. In July 2020, Amazon.com, Inc. (NASDAQ:AMZN) launched The Climate Pledge Fund to accelerate the development of sustainable technologies and services in line with The Climate Pledge. Additionally, Amazon.com, Inc. (NASDAQ:AMZN) is backing nearly 1.7 GW of capacity across six offshore wind farms in Europe, which, when fully operational, are expected to generate enough energy to power 1.8 million average European homes. These initiatives make Amazon.com, Inc. (NASDAQ:AMZN) the world’s leading corporate buyer of offshore wind energy.
In the first half of 2024, Amazon.com, Inc. (NASDAQ:AMZN) saw its operating income surge 141% year-over-year, reaching a record high. Amazon Web Services (AWS) was the primary driver of this profit, contributing 84% of the company’s second-quarter operating income. As a leading cloud platform, AWS is projected to grow annually by 15% to 21% through 2028, making Amazon’s performance a crucial factor in future profit forecasts.
Amazon.com, Inc. (NASDAQ:AMZN) is also a dominant force in digital advertising, surpassing a $50 billion annual run rate with 20% growth. The company generated $53 billion in free cash flow over the past year and remains appealing at its current share price, bolstered by strong cash flow yields.
Morgan Stanley recently reiterated its positive outlook on Amazon.com, Inc. (NASDAQ:AMZN), maintaining an Overweight rating and a $210 price target. The firm remains optimistic about AMZN’s financial prospects, noting that the stock is currently trading at 21 times Morgan Stanley’s projected 2026 free cash flow. This valuation suggests a 30% growth rate in free cash flow per share CAGR from 2024 to 2026, representing a roughly 30% discount compared to the median growth-adjusted multiple of Amazon’s mega-cap tech peers.
Patient Capital Opportunity Equity Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Amazon.com, Inc. (NASDAQ: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.”
