8. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders as of Q2: 308
Analyst Upside as of October 10, 2024: 20.45%
Amazon.com Inc (NASDAQ:AMZN) is a market leader in cloud computing and e-commerce retail, affirming its long-term growth prospects. The company generates a significant chunk of its revenues from e-commerce, with a market share of 37.6%.
Cloud computing is increasingly becoming an essential piece of the puzzle amid artificial intelligence, as the company has a market share of 31% in the multibillion-dollar industry. The segment posted an 18.8% revenue increase in Q2 and has reported 30% plus operating margins consistently for the past five quarters.
Likewise, Amazon.com Inc (NASDAQ:AMZN) is diversifying its operations into the fiercely competitive streaming service ad-supported market. As the US tech giant intensifies its push into ad-funded streaming services, it plans to introduce more ads across its popular TV series and films on Prime Video in the upcoming year.
By the end of the year, Amazon is expected to have $127.4 billion in cash and short-term investments, which will be three times its 2018 total. It is also expected to have nearly $400 billion in cash by 2027, far exceeding its competitors in the Big Tech sector.
This is an incredible transformation for a business known for operating on thin margins, reinvesting most of its profits, and having comparatively little cash compared to its peers.
Record profits from cloud computing, advertising, and increased efficiency, including cost reduction, are the main drivers of Amazon.com Inc (NASDAQ:AMZN) ‘s cash increase. S&P Global Market Intelligence estimates that the company’s free cash flow will almost double from $36.8 billion last year to $70.8 billion in 2025.
After other tech companies like Alphabet and Meta began giving back more of their cash to shareholders earlier this year, there was a surge in hopes for an Amazon.com Inc (NASDAQ:AMZN) dividend or at least more share buybacks in recent quarters. Likewise, analysts on Wall Street rate the stock as a Buy with an average price target of $222.95, implying 20.45% upside potential from current levels. According to our Insider Monkey database, AMZN was held by 308 hedge funds at the close of Q2 2024 with total stakes amounting to $65.85 billion.
Meridian Hedged Equity Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a global technology company that operates e-commerce, cloud computing, digital advertising, and other businesses. We own Amazon because we believe it is well-positioned to benefit from several strong secular trends, including the shift to online shopping, the growth of cloud computing, and the increasing importance of digital advertising. The company exceeded expectations in the first quarter, with cloud-computing revenue growth accelerating, driven by easing cost optimization pressures and the ramp of generative AI workloads. The North American retail segment drove record operating margins, highlighting the success of Amazon’s efforts to improve efficiency and lower its cost to serve. International retail also showed promise, as emerging markets steadily progressed towards profitability. Given the strength across these key segments, we continue to hold the position in the company.”
