1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) ranks first on our list of the best innovative stocks to invest in according to hedge funds. The technology company is an e-commerce giant that also provides streaming and cloud computing services.
Amazon.com’s (NASDAQ:AMZN) growth trajectory in AI is exceptional. On November 1, Arun Sundaram, senior equity research analyst at CFRA Research, joined Market Domination on Yahoo Finance to discuss Amazon’s results and its AI spending. Sundaram shares his bullish thesis on the stock suggesting it has all the “ingredients” needed for a stock to go up. He adds that all hyperscalers are increasing their capital expenditures on AI, including Amazon, and while investors are concerned over stocks like MSFT and META, they are less likely to be worried about AMZN pouring into AI. Sundaram stresses that AMZN is not reliant on Nvidia for chips as the company is building and creating chips of its own that are valuable and less costly. In addition to that, the company is less likely to experience capacity constraints as is the case for MSFT.
Amazon.com, Inc. (NASDAQ:AMZN) has not only been actively involved in the development of AI hardware and software but has also signed partnerships with the government and AI startups. Similarly, in a recent development, on October 16, Amazon.com, Inc. (NASDAQ:AMZN) announced its plans to invest in nuclear energy to meet the power demand from AI data centers.
Amazon.com, Inc. (NASDAQ:AMZN) has significant growth potential and to achieve such the company is working tirelessly. Over the next few years, the company is not only poised to become a fully functional AI company but it is also on track to become carbon-free.
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 certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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