1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) is an American technology company that deals in e-commerce, online advertising, cloud computing, artificial intelligence, and digital streaming. It is the best NASDAQ stock to invest in right now with sales soaring, driven by advancements in artificial intelligence and accelerated growth in the company’s AWS division. Moreover, according to Insider Monkey, 308 hedge funds had investments in the tech giant as of Q2 2024, with the highest stake held by Fisher Asset Management, valued at $8.4 billion.
During Q2, the company’s revenue was worth $148 billion, registering an 11% increase year-over-year. Operating income surged 91% from the same period last year to a total of $14.7 billion. Revenue for AWS was recorded at $26.3 billion, up 18.8%. The segment now has an annualized revenue run rate of over $105 billion. Advertising revenue for the quarter also crossed the $2 billion mark, contributing to the more than $50 billion advertising revenue earned by Amazon.com, Inc. (NASDAQ:AMZN) in the last 12 months. Store sales grew 9% in North America and 10% in the international markets, fueled by fast delivery and lower prices.
The company has also been spending heavily on capital expenditure and incurred $30.5 billion in capital investments during the first half of 2024. The management expects the figure to be higher during the second half of the year, mainly driven by the need for AWS infrastructure as demand surges for both generative AI and our non-generative AI workloads. Amazon’s leadership is bullish about the long-term impact of artificial intelligence on the business.
Investors also remain confident about the company’s trajectory, especially given the strong performance of AWS, where backlog increased 19% year-over-year to reach a staggering $156.6 billion at the end of Q2, indicating strong future demand. The segment’s profitability is also improving and has jumped from the mid-20% range last year to over 30% this year due to strategic decisions made over the past year to eliminate inefficiencies and reduce costs.
Ithaka US Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
Founded in 1994, Amazon.com, Inc. (NASDAQ:AMZN) has evolved from its early roots as an online bookstore to become one of the world’s largest eCommerce retailers. At the end of 2023, Amazon stood poised to capture ~40% of all US e-commerce sales, representing five times more share than the next closest competitor. In addition to eCommerce, Amazon Web Services (“AWS”) has become the market leader in outsourced cloud infrastructure. Further, Amazon Advertising is garnering a significant share in digital advertising, particularly product placement ads, thanks to consumers beginning their product searches on Amazon’s site. Amazon’s stock appreciated on the back of stabilization of the company’s cloud computing segment and increased confidence management would be able to contain expenses and push operating margins above prior peaks in the near-to-medium term.
The only bearish concern at this point is around the fluctuating operating margins of AWS. However, one reason behind that is the investments Amazon is making to improve efficiency and in building new products. The overall outlook for the company is positive. There is consensus among Street analysts on the stock’s Strong Buy rating with forecasts of a 16% upside in its share price.
Overall, AMZN ranks first among the 10 Best NASDAQ Stocks To Invest In Right Now. While we acknowledge the potential of technology companies, 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 AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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