1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) is an American multinational technology company headquartered in Seattle, Washington. It engages in e-commerce, online advertising, cloud computing, artificial intelligence, and digital streaming. According to Insider Monkey, Amazon is the most owned stock by hedge funds right now. As of Q2 2024, 308 hedge funds held stakes in the company.
During Q2, the company posted a robust revenue of $148 billion, up 11% from last year. Operating income for the quarter also soared 91% to reach $14.7 billion. AWS revenue grew 18% to a total of $26.3 billion. The segment now has an annualized revenue run rate of over $105 billion. The advertisements segment continued its impressive run, with revenue crossing the $2 billion mark during the quarter. Amazon has now earned over $50 billion from advertising revenue over the last 12 months.
The company has been spending heavily on capital expenditure and has incurred $30.5 billion during the first half of the year. The figure is expected to be slightly higher during the back half of 2024, fueled by the need for AWS infrastructure as demand surges for both generative AI and our non-generative AI workloads. The company’s leadership is optimistic about the long-term impact AI investments will have on its business.
Wall Street analysts also remain bullish on Amazon. There is a consensus among them on the stock’s Buy rating with a share price upside potential of 18%. There is good reason for their optimism, given the strong demand anticipated for AWS. The segment’s backlog was up 19% from last year to $156.6 billion at the end of Q2. It is also seeing improved profitability, having jumped from the mid-20% range in 2023 to over 30% this year as Amazon eliminates inefficiencies and clamps down on costs.
Having said that, there have been some investor concerns stemming from the fluctuating operating margins of AWS. However, that is likely due to the investments that the company has been making to improve efficiency and build new products.
Overall, AMZN ranks first among the 10 Most Owned Stocks by Hedge Funds Right Now. While we acknowledge the potential of e-commerce 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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