1. Amazon.com Inc. (NASDAQ:AMZN)
Market Capitalization as of September 14: $1961.21 billion
Number of Hedge Fund Holders: 308
Amazon.com Inc. (NASDAQ:AMZN) is engaged in e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence, and is considered one of the Big Five American technology companies. It started by selling books online but now offers a massive selection of products across various categories. Beyond e-commerce, it owns AWS, a dominant cloud computing platform, and has a significant presence in digital streaming with Prime Video.
As of Q2 2024, Amazon.com, Inc. (NASDAQ:AMZN) is held by 308 hedge funds. From these, the highest stake is valued at $8,460,561,806 by Fisher Asset Management.
The company remains a leader in online retail and cloud computing. AWS is its most profitable segment, boasting over 30% margins, though it faces increasing competition from Microsoft Azure and Google Cloud. AWS is projected to grow annually by 15% to 21% through 2028, making its performance a crucial factor in the company’s future profits. AWS increased its revenue by 18.8% year-over-year in Q2 2024.
Amazon Prime has also evolved into a major success led by 200 million global members and enhancing customer loyalty. The subscription service drives higher spending among members and is approaching an annual run rate of $100 billion, alongside significant growth in Advertising Services. However, physical stores, including Whole Foods Market, remain the smallest and slowest-growing revenue stream for the company.
Hayden Capital stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Our portfolio is still recovering from the 2022 downturn, although we’ve made meaningful progress in the last two years. While that experience has taught us many lessons, that dislocation also provided a rich vein of opportunities that we continue to mine today.
Some of our biggest winners in the last two years, have been “re-acceleration” stories. These are cases where once rapidly growing companies suddenly put the brakes on during a weak economy. There could be several reasons for this – customers pulling back during a recession, the company proactively curtailing growth spend as a precaution, needing to cut costs & right-size the business to become profitable quickly, or many other reasons.
But the commonality seems to be that as soon as growth stops, the market narrative turns suddenly from positive, to “this company is finished”. They go from being valued for many years of rapid growth, to being priced like a mature company that will never realize significant growth again. But often neither scenario is true, with the ultimate future path somewhere in between.
I find the fact this type of opportunity even exists, fascinating. Especially since it seems to happen every bear-market – perhaps indicating it’s embedded in human nature (and thus persistent & likely minable throughout one’s investing career). For example, I gave the examples of Amazon.com, Inc.’s (NASDAQ:AMZN) stock performance in our Q1 2022 letter (please re-read this piece for more context; LINK)…” (Click here to read the full text)
While we acknowledge the growth potential of Amazon.com Inc. (NASDAQ:AMZN), our conviction lies in the belief that AI stocks hold great promise for delivering high 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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