1. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com Inc. (NASDAQ:AMZN) is a multinational technology company that revolutionized e-commerce, offering a vast selection of products, from books and electronics to groceries and clothing. Beyond retail, it provides cloud computing services through AWS, streaming content through Prime Video, and offers voice-enabled smart devices powered by Alexa.
In the second quarter of 2024, the company saw a 10.12% jump in revenue as compared to the year-ago period, driven by a 19% rise in AWS and $14.7 billion in operating income. The company now expects continued growth of 8-11% in Q3 2024. It has poured $30.5 billion into AI this year, with plans to increase spending. This reflects the growing demand for generative and non-generative AI.
The company partnered with Databricks for a five-year deal to create a data warehouse startup using Amazon.com Inc.’s (NASDAQ:AMZN) Trainium AI processors. This will help businesses develop AI models more efficiently and cost-effectively, leveraging the benefits of Amazon.com Inc.’s (NASDAQ:AMZN) AI chips.
On October 16, it introduced a new Kindle device with a color display, the Kindle Colorsoft. This is a significant update as the company has been criticized for lacking a color e-reader. Additionally, the Kindle Scribe now has AI features for summarizing notes, and the Kindle Paperwhite has been slimmed down while maintaining its long battery life.
Its diverse business model, led by its dominant cloud division and growing advertising segment, positions it for continued success. Record-breaking Prime sales further solidify its position as a leading e-commerce and technology giant, making Amazon.com Inc. (NASDAQ:AMZN) a strong investment option.
Meridian Hedged Equity Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a global technology company that operates e-commerce, cloud computing, digital advertising, and other businesses. We own Amazon because we believe it is well-positioned to benefit from several strong secular trends, including the shift to online shopping, the growth of cloud computing, and the increasing importance of digital advertising. The company exceeded expectations in the first quarter, with cloud-computing revenue growth accelerating, driven by easing cost optimization pressures and the ramp of generative AI workloads. The North American retail segment drove record operating margins, highlighting the success of Amazon’s efforts to improve efficiency and lower its cost to serve. International retail also showed promise, as emerging markets steadily progressed towards profitability. Given the strength across these key segments, we continue to hold the position in the company.”
While we acknowledge the growth potential of Amazon.com Inc. (NASDAQ:AMZN), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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