1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Holders as of Q2: 308
There is no doubt that Amazon.com, Inc. (NASDAQ:AMZN) is one of the stocks that will make you rich in 5-10 years, given its market-leading position in e-commerce, cloud computing and electronics. Additionally, it is making a name for itself amid the artificial intelligence race as it leverages technology to strengthen its competitive edge.
Over the past two years, Amazon.com, Inc. (NASDAQ:AMZN)’s venture into generative AI has generated the most excitement for the stock. Consumers are utilizing and benefiting from Amazon’s AI tools, which should allow the company to maintain its leading position in cloud computing and increase its market share as it invests in improvements and new features. In the second quarter, Amazon Web Services (AWS) sales growth accelerated to 18.8% year over year, attributed to the integration of AI.
AI might offer Amazon.com, Inc. (NASDAQ:AMZN) new opportunities and the biggest growth prospects. However, it is making investments in its other ventures and yielding outcomes. For some time now, Amazon’s fastest-growing business has been advertising. In the second quarter of this year, revenue climbed by $2 billion, or 20% yearly.
Through sponsored ads on its e-commerce platform, it already provides unrivaled exposure to advertisers targeting Amazon customers; now, with the launch of its new ad-supported Prime streaming tier, Amazon and advertisers will have even more opportunities.
Revenues were up by 10% in the second quarter to $148 billion, attributed to Amazon.com, Inc. (NASDAQ:AMZN)’s e-commerce and cloud computing dominance. Due to each of these divisions’ advantages, investors should anticipate sustained growth from both of them. In the US, e-commerce only accounts for about 16% of retail sales.
As its cloud computing and e-commerce businesses grow, Amazon.com, Inc. (NASDAQ:AMZN) is witnessing excellent margin expansion and revenue growth, affirming how it is well-positioned to generate long-term shareholder value. The operating margin reached an all-time high of 9% over the past 12 months. The robust growth justified the stock trading at a premium with a price-to-earnings multiple of 31.
Diamond Hill Select Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Among our top individual contributors in Q2 were Amazon.com, Inc. (NASDAQ:AMZN), Texas Instruments and Mr. Cooper Group. Internet retail and cloud infrastructure company Amazon is benefiting from strong profitability, particularly in its Amazon Web Services (AWS) business. Shares also received a boost amid growing optimism around the demand for AWS as Amazon customers’ investments in generative AI projects continue growing.”
While we believe in AMZN’s potential, we believe that certain AI stocks promise to deliver high returns 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.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
