1. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com Inc. (NASDAQ:AMZN) is a technology company that evolved from an online bookstore into a diversified conglomerate. Its core businesses include e-commerce with an online marketplace, along with cloud computing through Amazon Web Services (AWS). It also offers digital streaming services and has expanded into areas like AI, advertising, and physical retail.
During Q3 2024, AWS led the charge in profitability, contributing $10.4 billion to the company’s total operating income of $17.4 billion. Its cloud offerings are improved through customer-centric initiatives. A recent example is the launch of the Oracle Database@AWS service, which enables customers to migrate their Oracle workloads to AWS infrastructure with minimal modifications.
AWS dominates AI due to its unrivaled computing power, essential for training large models. Its user-friendly AI platform and scalable infrastructure, coupled with high switching costs, make it the preferred choice for businesses over managing their own AI infrastructure. The total cloud market is expected to grow from $700 billion in 2024 to ~$2,400 billion in 2032, which positions AWS for further growth.
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.”
As 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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