1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Holders: 302
Amazon.com Inc (NASDAQ:AMZN) has become one of the best AI stories on Wall Street. The company is poised for significant growth in AI, thanks to its generative AI tools in Amazon Web Services (AWS) such as Amazon Q, Amazon Bedrock, and Amazon SageMaker. In March, Amazon.com Inc (NASDAQ:AMZN) invested an additional $2.75 billion in Anthropic, an artificial intelligence safety and research company, bringing its total investment to $4 billion. The company is leveraging Anthropic’s models and just launched the Claude 3.5 Sonnet to Amazon Bedrock, Anthropic’s most powerful model yet. Claude 3.5 Sonnet is twice as efficient as Claude 3 Opus and is one-fifth of its price. The new AI can perform extremely complex tasks and is well-equipped with skills in producing high-quality and authentic creative content, understanding data and contextual relationships, and developing advanced codes with sophisticated reasoning.
Amazon is also making in-house AI chips such as the AWS Trainium, and AWS Inferentia for deep learning training of more than 100 billion parameter models. The company is on its way to becoming an AI powerhouse. AWS logged $25 billion in revenue, up 17% year-over-year. In 2023, the company spent $48.4 billion in capital expenditure. to advance its generative AI and non-generative AI workloads. As per a recent update, Amazon plans to spend more than $100 billion to fund its projects in artificial intelligence and data centers over the next decade.
Maxim Group’s managing director and senior consumer internet analyst Tom Forte talked about Amazon’s AI position in a recent interview on Yahoo Finance. Forte believes Amazon (NASDAQ:AMZN) is well positioned to exploit artificial intelligence at the cloud computing and fulfillment center level, especially compared to tech giants like Apple. The company is making advancements in AWS while also employing techniques to automate its operations, which is a positive sign for investors.
Overall, Amazon.com Inc (NASDAQ:AMZN) was held by 302 hedge funds at the close of Q1 2024 with total stakes amounting to $60.37 billion. Of those, Ken Fisher’s Fisher Asset Management was the highest stakeholder with a position of $7.68 billion.
On July 1, Needham reiterated a buy rating on the stock and maintained its price target of $205. Analysts’ median price target of $220 represents an upside of 11% from current levels.
Lakehouse Capital is also bullish on the stock. Here are some comments about AMZN from its Q1 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) delivered an impressive quarterly result that also came in well ahead of analyst expectations. Net sales increased 13% year-on-year to $143.3 billion and operating profits increased 219% year-on-year to $15.3 billion (vs the high end of guidance at $12.0 billion). As has been the case for several quarters now, the highlight of the result was the significant improvement in profitability metrics, as management continues to drive cost efficiencies across its retail operations and Amazon Web Services (AWS). Amazon delivered to Prime members at its fastest speeds ever. In March, across the top 60 largest U.S. metro areas, nearly 60% of Prime member orders arrived the same or next day, and in London, Tokyo, and Toronto, 3 out of 4 items were delivered the same or next day. Bigger picture, we continue to believe that the market underestimates the length of the runway ahead in the core retail business (note that e-commerce sales in the U.S. still only make up 15% of total retail sales) and that there is still significant margin expansion ahead as scale and efficiency benefits continue to come through.”
However, Amazon bears believe the stock is overvalued, trading at 43 times this year’s earnings estimate. For value-conscious investors, there are several other opportunities. If you are looking for an AI stock that is as promising as AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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