In this article, we will take a detailed look at 10 Trending AI Stocks in October.
Tom Lee, Fundstrat co-founder, while talking to CNBC in a latest program, explained his bullish case for the market and why he believes the S&P 500 is headed to close the year “well beyond” 5,700.
“Bull markets are supported by a strong fundamentals and this is a case where not only has the economy survivie extremely high interest rates but the Fed is beginning to cut rates, and an economy that has been sort of languishing has been China. Now we have stimulus and what looks like some bazooka policies that are supporting that region, and we have a lot of cash on the sidelines. I think this is a formula for stocks to do pretty well the next three to 12 months, and that’s why we think that we would be well beyond 5700 before year-end.”
Lee said that he’s inclined to buy “risks outright” as he believes more upward momentum would come for stocks after the election.
“Small caps still have good fundamentals, earnings growth is accelerating, the media P/E is eleven times which is almost seven turns lower than the S&P so I think there is still case to be made that small-cap are starting a multi-year gain.”
For this article we picked 10 AI stocks that are making big moves on the back of latest news. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Absci Corp (NASDAQ:ABSI)
Number of Hedge Fund Investors: 17
Absci Corporation is a U.S.-based company that uses generative AI and scalable wet lab technologies to accelerate biologic drug creation by optimizing multiple drug characteristics simultaneously for improved discovery and therapeutic outcomes.
The stock recently received a Buy rating from Guggenheim, which set a price target of $10.00. The firm cited Absci Corp (NASDAQ:ABSI) unique position in leveraging AI to lead the development of first- and best-in-class biologics.
The company’s platform can quickly assess millions of antibody variants, provides a competitive edge in generating large-scale proprietary data—an increasingly valuable asset in the biotech industry.
Guggenheim’s report highlights the potential of Absci’s AI-driven technology to significantly impact the biologics sector. Advances in AI, particularly through Large Language Models, are reshaping various industries, and Absci’s drug discovery approach positions it at the forefront of these changes.
The company balances risk in its pipeline with a mix of fast-follower programs and new biological explorations. This strategic approach, combined with the leadership team’s expertise, sets Absci Corp (NASDAQ:ABSI) up to benefit from the evolving techbio landscape.
The analyst’s $10.00 price target reflects confidence in Absci’s growth trajectory and its ability to use AI to drive advancements in biologics. The stock rating is based on the company’s current technological strengths and its strategic market positioning.
Absci Corp (NASDAQ:ABSI) utilizes its IDCP technology to rapidly produce high-quality drug candidates in as little as six weeks, reducing costs and boosting research success rates. The company has promising drug candidates in areas like inflammatory bowel disease, dermatology, and immuno-oncology, securing major partnerships valued at over $900 million, including royalties.
Absci is set to initiate a Phase 1 study of ABS-101 for inflammatory bowel disease (IBD) in early 2025, with interim data expected in the second half of the year. ABS-101 aims to stand out through features like de novo antibody creation, multiparameter lead optimization, and reverse immunology, offering potential advantages in potency and dosing flexibility.
The global markets for Crohn’s Disease and ulcerative colitis treatments are projected to reach $17.8 billion and $14.77 billion, respectively, by 2033.
9. HP Inc (NYSE:HPQ)
Number of Hedge Fund Investors: 41
HP Inc (NYSE:HPQ) made news as Citi downgraded the stock, reflecting a “more cautious” outlook for the PC sector. Analyst Asiya Merchant noted in a client memo, “Recent checks in the PC ecosystem suggest the near-term PC refresh opportunity remains protracted, given macro uncertainty and Windows 10 EOL security patch extensions, while AI impacts are likely further out into 2026/2027.” She downgraded her rating on HP Inc (NYSE:HPQ) to Neutral from Buy but maintained her price target at $37. Merchant also highlighted ongoing challenges in HP’s printer segment, citing “aggressive” pricing and weakness in China as persistent headwinds.
What spooked investors in the latest quarterly results of the company was the lackluster growth in PC revenue (about 4.9%) and a decline in the printing segment. The printing segment has never been the center of attention of HP Inc (NYSE:HPQ) investors. However, the latest data shows the growth in AI PCs everyone was banking on remains far into the future.
In the last couple of quarters, the company’s inventory levels have been climbing, reaching $7.5 billion as of the end of the last quarter.
HP Inc (NYSE:HPQ) Days of Inventory Outstanding (DIO) jumped to over 67 days, significantly above its five-year average of 55.96 days, nearing the highest level in recent years. With sales slowing, this spike in DIO suggests HP Inc (NYSE:HPQ) could face pressure on its stock price and uncertain returns in the next 1-2 years.
Amid all of this, the stock would be a risky bet for those who are just basing their hopes on the AI PC growth catalyst.
Greenlight Capital stated the following regarding HP Inc. (NYSE:HPQ) in its Q2 2024 investor letter:
“In addition to gold, we had four material winners in our long portfolio this quarter. HP Inc. (NYSE:HPQ) jumped from $30.22 to $35.02. After seven quarters of declines, PC sales turned marginally positive during the quarter. The industry appears to be in the early stages of an upcycle, perhaps to be enhanced by recently launched AI-enabled PCs that are expected to ramp up over the next several quarters.”
8. Crowdstrike Holdings Inc (NASDAQ:CRWD)
Number of Hedge Fund Investors: 69
Crowdstrike Holdings Inc (NASDAQ:CRWD) seems to be recovering from the widespread outage experienced in July, with analysts from TD Cowen noting that significant customer churn is not anticipated and that Microsoft (NASDAQ: MSFT) is unlikely to sever ties with the cybersecurity firm.
In a recent note, TD Cowen analysts led by Shaul Eyal emphasized, “We reiterate our view that MSFT is unlikely to cut Crowdstrike Holdings Inc (NASDAQ:CRWD) off from accessing telemetry data out of the kernel given the mission criticality of the Falcon EDR platform product, which is deployed at over 29,000 customers, including 70% of the Fortune 100.” They observed that there does not appear to be significant near-term churn, as customers do not seem to be leaving in the wake of the July outage.
Eyal added that a more accurate assessment of revenue uplift potential will require patience over the next two quarters, allowing management to gain sufficient visibility into the Falcon Flex renewal pipeline. TD Cowen maintains its Buy rating on Crowdstrike Holdings Inc (NASDAQ:CRWD) stock with a price target of $380.
Despite the tech outage incident, the fundamental story of Crowdstrike Holdings Inc (NASDAQ:CRWD) remains unchanged, despite short-term damages. Wedbush Securities estimates that less than 5% of CrowdStrike’s customers might switch providers, potentially impacting revenue by $150 million out of the projected $3 billion in sales for fiscal year 2024. This would lower the company’s forward revenue growth from 30.6% to 25.6%, but even at this adjusted rate, Crowdstrike Holdings Inc (NASDAQ:CRWD) would remain well above the IT sector median.
TimesSquare Capital Management U.S. Focus Growth Strategy stated the following regarding CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q2 2024 investor letter:
“Our cybersecurity holdings were also beneficial to the strategy this quarter. That included the 20% gain from CrowdStrike Holdings, Inc. (NASDAQ:CRWD), a cloud-based network security service provider that supports a range of devices, endpoints, and cloud environments. CrowdStrike’s revenues and earnings exceeded expectations, with 33% growth in annual recurring revenue. CrowdStrike continues to see growing momentum in emerging areas such as Cloud Security, Identity, and Security Information & Event Management where it is displacing legacy providers. That led CrowdStrike’s management to increase its guidance for revenues and earnings for the balance of its fiscal year.”
7. ServiceNow Inc (NYSE:NOW)
Number of Hedge Fund Investors: 97
William Blair’s top picks list also includes NOW. The firm recently said it views ServiceNow Inc (NYSE:NOW) as a strong player in generative AI, benefiting from its established relationships with enterprises. “ServiceNow is seen as a key partner for many businesses, with direct access to CIOs and the broader C-suite due to its product positioning,” said analysts Jake Roberge and Arjun Bhatia. They noted that ServiceNow Inc (NYSE:NOW) can seamlessly integrate its GenAI solutions into the products its customers are already using.
ServiceNow Inc (NYSE:NOW) impressed the market with strong second-quarter results which have proved the company’s AI potential. Morgan Stanley’s Keith Weiss maintained his Overweight rating on the stock and a $900 price target, saying the AI momentum is real and continues to build. ServiceNow Inc (NYSE:NOW) said additional annual revenue from new Pro Plus edition contracts, which include generative AI features, doubled from the previous quarter. The company secured 11 new contracts worth over $1 million each. Analysts believe ServiceNow Inc (NYSE:NOW) strength is its NOW platform as it makes it easier for companies to integrate all tools and software at one place, including Salesforce, Microsoft, and SAP. The company’s portfolio has 168 digital workflow solutions with a 98% renewal rate.
In a tough environment for SaaS companies, ServiceNow Inc (NYSE:NOW) managed to raise its full-year guidance. It also raised its operating income by 50 basis points.
NOW is trading at about 40 times its estimated earnings for 2025, which is not a high multiple when compared with over 20% revenue growth estimates for ServiceNow Inc (NYSE:NOW) and an increasing number of growth catalysts.
Lakehouse Global Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its April 2024 investor letter:
“US-based software company,ServiceNow, Inc. (NYSE:NOW), provided another strong result, continuing its long and consistent track record of 20%-plus revenue growth combined with healthy profitability. Subscription revenues grew 25% year-on-year to $2.5 billion and free cash flow grew 47% year-on-year to $1.2 billion. The company’s core operating metrics were also impressive with remaining performance obligations growing 26% year-on-year to $17.7 billion (i.e. roughly 2x 2023 revenue) and renewal rates holding steady at 98%. Performance was evenly spread across segments, products, and geographies, with notable strength in the US federal government. The company now boasts 1,933 customers generating in excess of $1 million in Annual Contract Value (ACV), which is pleasing to see as it implies multiple solutions are involved and that the company’s platform model is increasingly resonating with customers. In our view, ServiceNow is one the highest quality software businesses globally as the combination of consistent growth at scale, robust free cash flow generation and a large addressable market make it a compelling opportunity.”
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 108
BofA Securities reaffirmed Advanced Micro Devices, Inc. (NASDAQ:AMD) Buy rating ahead of the company’s AI event on October 10.
BofA analysts, led by Vivek Arya, said their top AI picks remain Nvidia (NVDA) and Broadcom (AVGO). However, they maintained AMD’s rating, highlighting the company’s unique potential for CPU market share gains. AMD is well-positioned to take market share in the PC and server CPU sectors from Intel (INTC), which continues to face internal challenges and restructuring efforts.
The analysts also pointed to Advanced Micro Devices, Inc. (NASDAQ:AMD) potential to tap into the growing AI market. AMD estimates the total addressable market for AI accelerators will surpass $400 billion by 2027, a sector where Nvidia currently leads but continues to expand. The expanding market offers opportunities for alternative suppliers like AMD, particularly in the application-specific integrated circuit (ASIC) space.
Arya’s team believes that upcoming AI roadmap updates (including the MI-325/250/400 series) and server CPU advancements (Zen-5-based Turin versus Intel’s Granite Rapids) could reignite investor interest in AMD.
Despite these growth prospects, competition remains fierce. Investors expect AMD’s AI sales to grow another 10% in 2024 to exceed $5 billion, with potential to double year-over-year to $10 billion in 2025. However, the company still faces stiff competition from Nvidia, which holds over 80% of the AI market, and cost-effective custom ASICs from Broadcom and Marvell Technology (MRVL), which collectively control nearly 10%.
BofA analysts estimate Advanced Micro Devices, Inc. (NASDAQ:AMD) AI accelerator market share will remain at 5-7% for 2024-2026, well below its more than 20% share in consumer CPUs and gaming GPUs. But if AMD can carve out a 10% AI market share by 2026, it could add around $5 billion in sales, bringing potential earnings per share to $8-$9, up from current consensus estimates of $7.37.
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:
“Shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) lagged the market after the company reported earnings results that, while generally strong, left the market wanting more. The company reported AI revenue of ~$600 million and increased its forward-looking outlook for AI revenue growth, but shares took a breather, as results missed elevated expectations after the stock’s strong performance. Despite the stock’s underperformance during the quarter, the company’s AI story remains very much intact. The growth outlook for the company is supported by better cloud demand, enterprise recovery and continued share gains ahead of the company’s new AI product launch.”
5. Alphabet Inc (NASDAQ:GOOG)
Number of Hedge Fund Investors: 165
Pivotal Research initiated coverage on Alphabet Inc (NASDAQ:GOOG) with a “buy” rating on Tuesday, citing the company’s strong competitive position and deep moat around its core search business. Despite ongoing antitrust trials, the firm believes the potential negative outcomes are already reflected in Google’s stock price. Pivotal’s forecast for Google is conservative on search but anticipates significant growth in cloud revenue and sees untapped value in its moonshot ventures. The firm set a price target of $215, suggesting a 30% upside for Alphabet Inc (NASDAQ:GOOG) shares.
Despite constant alarms going off about its search business, Alphabet Inc Class C (NASDAQ:GOOG) search revenue jumped about 13.7% in the second quarter year over year. As of the end of June, Google has about 91.06% share of the search engine market, just 1.65% lower than the December 2019 levels. With AI overviews and other search initiatives, Alphabet Inc Class C (NASDAQ:GOOG) will be able to stave off any competitors given its dominance in the market. According to StatCounter report, Bing search engine’s market share only increased from 3.03% in August 2023 to 3.91% in August 2024. This shows MSFT has not been able to make any notable dent in Google’s market share.
Cloud and YouTube are two key strong catalysts for Alphabet Inc Class C (NASDAQ:GOOG) shares. During the second quarter, Alphabet’s Cloud revenue rose 28.8% to $10.35 billion, crushing past analysts’ forecasts of $10.16 billion. Alphabet Inc Class C (NASDAQ:GOOG) is on the path to reach a $100 billion revenue run-rate from YouTube Ads and Google Cloud by the end of 2024.
Diamond Hill Large Cap Strategy stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q2 2024 investor letter:
“Among our top individual contributors in Q2 were Amazon, Texas Instruments and Alphabet Inc. (NASDAQ:GOOG). Media and technology company Alphabet also continued delivering strong results in its search, YouTube advertising, YouTube subscription and cloud businesses. Shares rose amid an environment that continues favoring mega-cap technology companies.”
4. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 179
NVIDIA Corp (NASDAQ:NVDA) remains one of the “top picks” among large-cap generative artificial intelligence companies, according to William Blair. “The company has already seen tremendous growth for its GPU and parallel computing systems, and we believe there is time for continued growth, driven by robust training demand from hyperscalers and enterprises, and a ramping inference opportunity,” said William Blair analysts Sebastien Naji and Jason Ader in a detailed investor note.
NVIDIA Corp (NASDAQ:NVDA) has also built a strong competitive advantage, with its CUDA software stack being the standard interface for GPUs and AI, Naji added. Both training and inference offer further growth potential as the new Blackwell cycle gets underway.
Nvidia’s declines after the Q2 results were more or less expected amid Blackwell delay reports confirmed by management. However, the delays were mainly due to a change in Blackwell GPU mask. That does not affect the main functional logic or design of the chip, according to analysts. While Blackwell has been delayed for a few months, it does not change the core growth thesis for Nvidia.
Nvidia is set to see huge growth on the back of the data center boom amid the AI wave.
At Nvidia’s GPU Technology Conference in March 2024, CEO Jensen Huang estimated annual spending on data center infrastructure at about $250 billion. Over the next decade, this could total between $1 trillion and $2 trillion, depending on how long this level of investment continues. During the same Q&A session, Bank of America’s Vivek Arya echoed this estimate, suggesting the total addressable market would fall in the $1-2 trillion range, particularly as countries invest in their own AI infrastructure. By the end of the decade, spending could be at the high end of that range.
Of course, Nvidia won’t dominate the entire $2 trillion opportunity, as it faces competition from companies like AMD and internally developed AI accelerators from Google, Amazon, and even Apple. Some analysts believe Nvidia’s data center market share between 2025 to 2029 will be over $950 billion—less than half of the total market—but still enough to make it the leader in the sector.
ClearBridge Large Cap Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:
“This focus on consistency also guides our regular trimming of strong performers to manage stock-specific and overall portfolio risk. The quarter saw us continue to trim NVIDIA Corporation (NASDAQ:NVDA), reducing the GPU chipmaker from an active weight in the portfolio to an underweight versus the benchmark. We continue to believe in Nvidia’s 10-year trajectory as hyperscaler and enterprise customers invest in GPU architecture. However, we have reduced our Nvidia position as its valuation now more fully reflects the company’s robust growth path and as estimates have risen to levels that require a very steep growth trajectory to drive further stock appreciation.”
3. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 184
Apple (NASDAQ: AAPL) may have reduced its iPhone 16 production for the December quarter by 3 million units, according to a supply chain check by Barclays. Analysts Tim Long and George Wang noted, “We believe AAPL may have cut roughly 3M units at a key semiconductor component for the Dec-Q, which, if confirmed, would be the earliest build cut in recent history.”
Apple Inc (NASDAQ:AAPL) is set to roll out its Apple Intelligence features in the U.S. starting mid-October with the iOS 18.1 update. However, the Chinese-language rollout will not begin until 2025, with Europe seeing a similarly staggered introduction.
Barclays believes iPhone shipments for the September quarter could reach 51 million units, assuming favorable channel fill. But the December quarter appears increasingly at risk due to recent order cuts, disappointing sell-throughs, a staggered Apple Inc (NASDAQ:AAPL) Intelligence rollout, limited AI adoption outside the U.S., and minimal hardware differentiation. The firm maintains its Underweight rating on Apple.
Almost every bullish case on Apple Inc (NASDAQ:AAPL) was built around this assumption: millions of people would rush to upgrade their iPhone because of AI features.
However, Apple Inc (NASDAQ:AAPL) has been seeing a long-term decline in mobile carrier upgrade rates, especially postpaid, for several years. This suggests that people are holding onto their devices longer, likely due to economic factors, satisfaction with current technology, or a lack of exciting new features in recent models. This trend isn’t great for Apple Inc (NASDAQ:AAPL). Can Apple Intelligence break this trend? We’ll find out soon.
However, the assumption that we will see a huge upgrade cycle of iPhone just because of AI is big and comes with a lot of risks. Apple Inc (NASDAQ:AAPL) trades at a forward PE multiple of around 35x, well above its 5-year average of nearly 27x. Its expected EPS forward long-term growth rate of 10.39% does not justify its valuation, especially with the iPhone upgrade cycle assumption. Adjusting for this growth results in a forward PEG ratio of 3.33, significantly higher than its 5-year average of 2.38.
Columbia Contrarian Core Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter:
“Apple Inc. (NASDAQ:AAPL) – Despite the stock falling after announcing earnings in late May, Apple regained ground toward the end of the quarter, fueled by the company’s long-awaited AI announcement at its annual Worldwide Developers Conference (WDC). At the conference, the company showcased some of its new AI features powered by Apple Intelligence that would be coming to Apple products and also announced a partnership with ChatGPT. Investors greatly welcomed the announcement of Apple’s AI strategy and the stock surged, passing Microsoft as the world’s most valuable company (although this hallmark wouldn’t last). Beta testing of these new features will be coming later this summer, but the initial promise and excitement looks to be a potential catalyst for an upgrade cycle, as the company looks to persuade users who have had the same smartphone for years to consider an upgrade.”
2. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Investors: 219
William Blair recently added Meta Platforms to its list of top picks. The social media giant stands out for its open-source approach and is finding new ways to monetize generative AI (GenAI).
“There are early signs of positive GenAI impacts for Meta Platforms Inc (NASDAQ:META), with significant upside opportunity via new GenAI products and potential CPM uplift,” said William Blair analyst Ralph Schackart. He also noted that Meta has considerable potential to scale and monetize bots using GenAI.
Meta Platforms Inc (NASDAQ:META) crushed past analyst estimates for its Q2 results, giving signs that the huge AI spending it’s doing would bear more results in the future.
The market has been reluctant about Meta Platforms Inc (NASDAQ:META) massive spending on AI. What does Meta want to achieve with its AI spending? The company wants to use AI to improve engagement and language models like Llama 3 to improve user interactions, boost engagement, and better monetize its 3.2 billion daily active users.
But can Meta Platforms Inc (NASDAQ:META) sustain this high spending? The company’s free cash flow margin is around 30%, and it’s well on track to report $50 billion in free cash flow this year. Based on this target the stock is trading at around 26 times this year’s free cash flow. Given the current trajectory continues Meta Platforms Inc (NASDAQ:META) can post $58 billion in free cash flow by next year, which means the stock is trading at 21 times next year’s free cash flow. With a whopping $35 billion in net cash, a strong user base, and a key position in the consumer-facing side of the AI industry, Meta Platforms Inc (NASDAQ:META) could be a solid long-term investment.
Rowan Street Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q2 2024 investor letter:
“We are pleased to report that Meta Platforms, Inc. (NASDAQ:META), our largest position in the fund, has delivered a remarkable performance, +450% since our November 2022 note. Our investment in Meta dates back to 2018, with an average cost basis of approximately $172 per share. Today, the stock trades around $535, reflecting a 3x return over the six-year holding period, equating to a 20% annualized return.
We would like to remind you that achieving these types of returns is never a straight path. From time to time, we might experience volatility — that’s simply part of the investment journey. In fact, wealth creation and volatility go hand in hand. There’s no escaping it; it’s the “price of admission” the market demands. If you take a look at the chart below, you’ll notice the drawdowns META stock has faced over the years, with 2022 standing out as a particularly challenging period, where the stock saw a 75% drop…” (Click here to read the full text)
1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 308
William Blair analysts see Amazon.com Inc (NASDAQ:AMZN) as a major beneficiary of generative AI, primarily through its AWS cloud division and e-commerce platform. “AWS’s extensive infrastructure and leading position in the cloud market make it an ideal choice for developing large language models and deploying GenAI applications,” said analysts Arjun Bhatia and Dylan Carden. They believe growing demand for compute resources driven by GenAI workloads will fuel AWS’s growth, given the resource-heavy nature of LLMs and GenAI applications. The investment bank also expects GenAI to improve user experiences on Amazon.com Inc (NASDAQ:AMZN) e-commerce platform.
AWS’s revenue growth accelerated from 17.2% in Q1 to 18.8% in Q2, driven by a shift from on-premises infrastructure to cloud solutions and increasing demand for AI capabilities. Amazon.com Inc (NASDAQ:AMZN) advertising segment added over $2 billion in revenue year-over-year, indicating significant potential in video advertising and opportunities within Prime Video offerings.
Like other tech companies, fears stemming from high CapEX are keeping investors on the sidelines. Amazon.com Inc (NASDAQ:AMZN) spending is expected to rise amid broadband project Project Kuiper and AI growth. Investors are still figuring out whether AI monetization and ROI will come anytime soon. Amazon.com Inc (NASDAQ:AMZN) is also facing a slowdown in consumer spending, especially for higher-ticket items like electronics and computers.
Based on Amazon.com Inc (NASDAQ:AMZN) Q3 guidance, its revenue growth would be 11%. The stock is trading 35x its fiscal 2025 earnings estimates set by Wall Street. This shows the stock is fairly priced and investors looking for strong growth could look elsewhere.
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.”
While we acknowledge the potential of Amazon.com Inc (NASDAQ:AMZN), our conviction lies in the belief that under the radar 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.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
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