1. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com Inc. (NASDAQ:AMZN) is a technology conglomerate with e-commerce as its core business. It also operates Amazon Web Services (AWS), which is a cloud computing platform. The company continues to innovate and expand into streaming services, AI, advertising, and even physical retail.
In Q3 2024, AWS was the primary driver of profitability for the company, contributing $10.4 billion to its total operating income of $17.4 billion. This reflected a 49.7% rise in profits. AWS revenue increased by 19.1% year-over-year, due to customer-centric initiatives. One advancement is the introduction of the Oracle Database@AWS service, which facilitates the seamless migration of Oracle workloads to AWS infrastructure with minimal adjustments.
AWS leads the AI sector due to its unmatched computing power, which is crucial for training large models. Its AI platform and scalable infrastructure make it the preferred option for businesses over managing their own AI systems. The total cloud market is projected to expand from $700 billion in 2024 to ~$2.4 trillion by 2032, positioning AWS for growth. In 2025, AWS plans to invest at least $11 billion in Georgia to expand its data center infrastructure.
Cantor Fitzgerald’s Deepak Mathivanan raised Amazon.com Inc.’s (NASDAQ:AMZN) price target to $270 from $240 while maintaining an Overweight rating. Mathivanan expects growth in digital ads, online shopping, and mobility to drive internet stock performance in 2025. He views the company as a top pick due to its strong AI development.
Montaka Global Investments increased its holdings in Amazon.com Inc. (NASDAQ:AMZN) due to a near -20% stock price decline, believing it offers more upside potential than other holdings like AMD and KD. Here’s what the company’s Q3 2024 investor letter stated:
“Secondly, in August, we sold some of our holdings in two tactical positions in the tail of Montaka’s portfolio – Advanced Micro Devices (AMD) and Kyndryl Holdings (KD) – to take advantage of a near-20% drawdown in the stock price of Amazon.com, Inc. (NASDAQ:AMZN).
We still see plenty of upside in AMD and KD, but Amazon has more substantial and higher-probability upside that demanded we allocate even more of Montaka’s capital to the online retailer.
Investment opportunities always compete for capital. Through this lens, Montaka’s largest investments act as a kind of ‘benchmark’: Any new investment must be more attractive than these holdings to get included in our portfolio.
Because we believe Montaka’s largest investments remain so attractive, our annualized portfolio turnover has been low for many years now – typically around 25%.
We continually identify quality global businesses with upside potential – but few new investment opportunities have greater upside than Montaka’s existing portfolio investments.
While Montaka is focused on investing over the long term, and most days don’t require any action on our part, paradoxically we need to be agile on a daily basis. That is, we must be ready to act if stock price changes throw up attractive investment opportunities.”
While we acknowledge the growth potential of Amazon.com Inc. (NASDAQ:AMZN), our conviction lies in the belief that AI stocks hold great promise for delivering high 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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