2. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holdings: 252
Based in Seattle, Washington, Amazon (NASDAQ:AMZN) is an American multinational technology company which specializes in e-commerce, cloud computing, digital streaming and AI. Its subsidiary, Amazon Web Services provides on-demand cloud computing platforms and APIs to individual, corporate, and state buyers. Amazon CloudFront is the company’s premium CDN service operated by AWS, and it speeds up the distribution of one’s static and dynamic web content. As of October 7, the company has a total market cap of more than $1.16 trillion. In Q2 2022, Amazon (NASDAQ:AMZN) posted a total revenue of $121.2 billion.
On October 4, BofA analyst Justin Post lowered the price target on Amazon (NASDAQ:AMZN) to $157 from $170, maintaining a Buy rating on the shares. While the analyst thinks that sales ex-forex are generally on track to hit Q3 guidance ranges after a profitable Q2, he has lowered the forward estimates for the stock to reflect the macroeconomic uncertainties and the appreciation of the U.S. dollar. J.P. Morgan has also offered a bullish take on the stock on October 4, considerably boosting the price target on the shares up. The bank’s analyst explained that despite macroeconomic headwinds, Amazon (NASDAQ:AMZN) is well positioned to outperform in the tough economic environment. The company is expected to return to mid-single margins as lower freight and fuel costs relative to the first half of 2022 offer tailwinds. The bank expects YoY revenue growth, margin expansion, and capex moderation to boost FCF inflection in 2023.
Here is what IP Capital Partners had to say about Amazon (NASDAQ:AMZN) in their Q2 2022 investor letter:
“Although it seems like a baseless question, the teasing in a joking tone makes sense. What Amazon has been doing since its inception is building two big infrastructure rails. One from the world of atoms and the other from bits. In the first, it has been building one of the largest logistics systems in the world, with almost 1,200 distribution centers , responsible for delivering, in less than 2 days, millions of products to the final consumer. In the second, it has a leading cloud computing service, allowing companies of all sizes to scale computing and data storage, without having to build and maintain their own in-house IT equipment.
Despite showing strong revenue growth since the beginning of the pandemic, these two infrastructures have had different realities in terms of operating results. The e-commerce operation has been going through a period of low profitability, despite the enormous advantage of scale and competitive dominance, with more than 40% of market share in the US. In turn, the cloud business – AWS – continues to grow at high rates and is already at a cruising pace in terms of operating margin and return on invested capital (both around 30%)…” (Click here to see the full text)
