5 Best Artificial Intelligence (AI) Stocks To Buy According to Analysts

2. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 240

Average Upside Potential Based on Analyst Ratings: 51.05%

Amazon.com, Inc. (NASDAQ:AMZN) is engaged in e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. Amazon Web Services (AWS) provides a comprehensive range of machine learning and artificial intelligence services to cater to various business requirements. In the fourth quarter, the company generated $149.2 billion in revenue, representing an 8.6% YoY increase and surpassing Wall Street’s projections by $3.43 billion. As such, Amazon.com, Inc. (NASDAQ:AMZN) is considered to be one of the top AI stocks for 2023.

On February 14, Loop Capital analyst Rob Sanderson kept a Buy rating and a $140 price target on Amazon.com, Inc. (NASDAQ:AMZN) following its Q4 results. The analyst noted that the retail business has made significant progress in improving its unit economics, excluding one-time charges such as employee severance, impairment charges, and increased insurance liabilities. According to Sanderson, the North America operating margin would have been approximately 2.6% if these one-time expenses were excluded, compared to the reported -0.3%. However, the analyst cautioned that the slowdown and margin compression at AWS is more significant than expected, and he is now taking a more cautious approach to this segment.

According to Insider Monkey’s fourth quarter database, 240 hedge funds were long Amazon.com, Inc. (NASDAQ:AMZN), compared to 269 funds in the earlier quarter. Harris Associates is a significant stakeholder of the company, with 19.3 million shares worth $1.6 billion. 

Weitz Partners III Opportunity Fund made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2022 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN), perhaps the ultimate “COVID beneficiary,” has seen its shares dip below pre-pandemic levels as investors brace for a potential recession’s impact both on retail spending as well as slowing adoption of Amazon’s cloud infrastructure service, Amazon Web Services.

Meta, Alphabet, Amazon and CarMax were all top detractors for the quarter and calendar year periods (FIS and Liberty Broadband, respectively, complete the quarterly and calendar-year detractor lists.) To varying degrees, each is managing through cyclical challenges during a period of substantial investor pessimism. Drawdowns of this magnitude are painful, and it may be prudent for management to moderate the pace of some investments, but we remain encouraged by their long-term focus. In the short run, cutting spending indiscriminately to “defend earnings” may lessen the pain of a drawdown, but it seldom grows a company’s business value — the ultimate prize.”