5 Most Overvalued Companies According to the Media

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

Number of Hedge Fund Holders: 286

Amazon.com, Inc. (NASDAQ:AMZN) is one of the most overvalued stocks according to many analysts and mainstream financial news media websites. Amazon shares have gained about 58% over the past one year. Amazon.com, Inc. (NASDAQ:AMZN)’s PE ratio stands at about 76.29 as of November 21. Amazon.com, Inc. (NASDAQ:AMZN) bears believe the company’s core ecommerce business is facing several challenges, including rising competition, macroeconomic headwinds, declining discretionary spending and market saturation. Analysts also believe since Amazon.com, Inc. (NASDAQ:AMZN)’s ads business is directly linked to its ecommerce platform sales and engagement, any weakness in its core business would directly affect other segments. Amazon.com, Inc. (NASDAQ:AMZN)’s Cloud business cloud also face further slowdown amid an overall lackluster growth in the industry.

But there’s no shortage of analysts who believe Nvidia has more room to run. Earlier this month, Barclays analyst Blayne Curtis said that Nvidia stock has more upside. He’s bullish on Nvidia’s H100 GPUs.

Here is what Polen Global Growth has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2023 investor letter:

“Amazon continues to showcase it’s place as one of the most competitively advantaged companies in the world. The company has made significant progress in managing costs and better leveraging existing capacity, driving a strong recovery in its profitability. We think there’s additional room for improvement.

AWS growth seems to be stabilizing even while management continues to work with clients to optimize their infrastructure spend. Roughly 90% of global IT spending remains on premise. We believe this will eventually flip, with most IT spending ultimately moving to the cloud over time. We think AWS will be a significant beneficiary of this transition.

Further, our investment case on company profitability driven by AWS and advertising continues to unfold, delivering nearly $8 billion in free cash flow over the trailing twelve months and a net margin of 5%. We expect both to move higher with the mix shift of more profitable businesses growing fastest continuing to take effect.

At Amazon’s current price, we believe the company is well positioned to deliver a mid-teens or higher total shareholder return for our clients over the next five plus years without a Herculean effort from the business. It simply needs to continue executing on current businesses and growing into the capacity it built during and immediately after the pandemic.”

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