7. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Average Upside Potential as of April 15: 43.31%
Amazon.com Inc. (NASDAQ:AMZN) engages in the retail sale of consumer products, advertising, and subscription services through online and physical stores internationally. It operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, such as Kindle and Fire TVs.
Revenue for the company’s AWS segment was up 19% year-over-year in Q4 2024. AWS is heavily investing in data centers for AI and expects similar spending in 2025. Amazon’s Tranium 2 AI chips are 30% to 40% cheaper than competitors, which helps the company attract clients like Anthropic (an AI safety/research company). However, Amazon has been currently struggling due to market volatility.
Because of these negative macro developments, JMP lowered the company’s price target to $240 from $285. Despite this move, the investment bank anticipates growth at Amazon.com Inc. (NASDAQ:AMZN) driven by its ad business and cloud infrastructure unit. Still, Amazon’s growth will be slowing down due to its e-commerce business deceleration, although its share of the e-commerce market will potentially increase according to JMP.
Nightview Capital is bullish on the company and stated the following regarding Amazon.com Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Artificial intelligence is no longer just a promise—it’s becoming the defining force of the modern economy. From self-driving vehicles to humanoid robotics, intelligent systems are not only enhancing efficiency but unlocking entirely new markets. These systems process and learn from vast amounts of real-world data, iterating and improving at a scale no human could achieve.
In our view, this isn’t just innovation; it’s exponential evolution. Companies leading the AI revolution are building formidable data moats, making it nearly impossible for latecomers to compete. Every mile driven by an autonomous vehicle, every task completed by an industrial robot—these actions feed a cycle of continuous improvement.
Amazon.com, Inc. (NASDAQ:AMZN): Core Opportunity: Amazon’s growth is anchored by three high-potential areas: retail margin expansion, a rapidly growing advertising business, and the continued growth and need for Amazon Web Services (AWS). Together, these pillars position Amazon for the next leg of growth and profitability.
Competitive Advantage: Retail Margin Expansion: With e-commerce still accounting for only 16% of retail sales in the United States (per the U.S. Census Bureau)—and even less globally—Amazon has significant room for growth. CEO Andy Jassy’s emphasis on AI-driven efficiencies, such as a possible 25% reduction in cost-to-serve, underscores the company’s ability to unlock new profitability in their now three-decade-old core business. More than a decade after the Kiva robotics acquisition, we see the potential for the next wave of automation to reduce variable cost per unit (VCPU) on the “pick and pack” and transportation side of the business as the decade progresses. Overall, we see EBIT margins expanding steadily throughout the next several years…” (Click here to read the full text)
