10 Best Stocks to Buy According to Billionaire D.E. Shaw

5. Amazon.com, Inc. (NASDAQ:AMZN)

D.E. Shaw & Co’s Stake Value: $842.15 Million

Number of Hedge Fund Holders: 286

Amazon.com, Inc. (NASDAQ:AMZN) is one of the best stocks to buy, according to billionaire D.E Shaw, for gaining exposure in the burgeoning e-commerce sector and cloud computing. The company is a market leader in the two industries from which it generates significant revenues and earnings.

Over the years, Amazon.com, Inc. (NASDAQ:AMZN) has also changed its business model and is now much more than just an online retailer. Although it has a well-known streaming service called Prime Video, its AWS cloud computing division is the company’s main source of revenue. Last quarter, this segment’s operating income jumped 49% to $10.4 billion, while its revenue increased by 19% and advertising revenue jumped 19% to $14.3 billion.

As the company’s growth in high-margin areas like advertising, marketplaces, and AWS surpass the growth in the rest of the business, profit margin should continue to grow. Its operating margin hit its greatest level ever in the third quarter, at 11%.

Amazon.com, Inc. (NASDAQ:AMZN) is using artificial intelligence (AI) to boost its growth metrics. Its SageMaker platform assists clients in developing their own AI applications, and its Bedrock platform provides foundational long language models (LLMs) for both itself and AI start-ups. By employing AI to determine the optimal routes, it also seeks to save logistical expenses.

Qualivian Investment Partners stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2024 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN): Amazon’s Q2 2024 results missed consensus revenue expectations slightly while beating EPS expectations nicely. Revenue grew 10.0%, including continued reacceleration in AWS (Amazon Web Services) which grew 19%; however, North American and International ecommerce revenue growth both showed slight deceleration in their growth rates from prior quarters. Advertising revenues grew 20%, which decelerated a bit from prior quarters as well.

Encouragingly, the company continued its streak of delivering impressive cost efficiencies in Q2 with operating margins jumping 420 bps vs. Q2 2023. Q3 2024 guidance was also a bit lower than consensus expectations sparking some short-term concerns about the strength of the consumer. We remain comfortable with our long-term outlook for Amazon’s ecommerce and AWS businesses, and expect they have new avenues of growth to exploit in scaling their advertising and generative AI business in the years ahead. However, we recognize that there is trepidation about the level of capex spending required to scale their generative AI business.”