6. Amazon.com Inc. (NASDAQ:AMZN)
Average Upside Potential as of April 8: 54.06%
Number of Hedge Fund Holders: 339
Amazon.com Inc. (NASDAQ:AMZN) provides consumer products, advertising, and subscription services through online and physical stores internationally. It has 3 segments called North America, International, and Amazon Web Services (AWS). Its products are offered through its stores and include merchandise and content purchased for resale, and products offered by third-party sellers.
The company’s AWS segment revenue improved by 19% year-over-year in Q4 2024, as more and more customers are moving to the cloud to use AI. The company’s AI chips under the name of Tranium 2 are 30% to 40% cheaper than competitors, which helps Amazon.com Inc. (NASDAQ:AMZN) attract big clients like Anthropic, which is an AI safety and research company. Amazon Q, which is an AI assistant, is saving companies time and money and showcases practical AI use.
AWS is heavily investing in data centers for AI and expects similar spending in 2025. On April 4, TD Cowen analyst John Blackledge lowered the price target on the company from $265 to $240 while keeping a Buy rating. This target was a result of current macro concerns and weak consumer sentiment overall. However, Blackledge believes that the stock’s valuation is appealing at its current levels and the company will report strong FQ1 2025 results, mostly fueled by AWS. Earlier in February, Blackledge had forecast AWS’s GenAI revenue to grow from $7.1 billion in 2025 to $56.3 billion in 2030.
Nightview Capital is bullish on the company due to its AI-powered efficiency gains in retail 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)
