1) Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 302
Amazon.com, Inc. (NASDAQ:AMZN) is a leading online retailer and one of the highest-grossing e-commerce aggregators. The company’s focus areas include e-commerce, cloud computing, digital streaming, and AI.
The stock of Amazon.com, Inc. (NASDAQ:AMZN) came under pressure after the internet giant missed analysts’ expectations on revenues. The company’s revenues fell short by $760 million. This was mainly because of the subdued growth of North American and international retail segments. This slowness in growth offset the accelerating growth of its Amazon Web Services cloud platform.
However, it seems that the knee-jerk reaction that broader markets saw has impacted the shares of Amazon.com, Inc. (NASDAQ:AMZN). The company has given a healthy outlook, with operating income expected to come in the range of $11.5 billion and $15 billion in 3Q 2024. Even at the mid-point, the company should be able to see an 18% YoY improvement. This compares to the analysts’ expectations of ~6.1% earnings growth in 3Q 2024 for S&P 500 companies.
Secondly, Amazon.com, Inc. (NASDAQ:AMZN) is expected to benefit from the opportunities in cloud computing. The company’s management is of the view that most of its customers have ended their cost management initiatives. These initiatives had earlier led to a slowdown in AWS sales growth. With these initiatives coming to an end, Amazon.com, Inc. (NASDAQ:AMZN)’s cutting-edge AI developments should help AWS grow its lead in cloud computing.
The company’s CEO said that the generative AI boom has been prompting more companies to upgrade their cloud services. AWS tends to have much higher operating margins as compared to the company’s e-commerce marketplaces.
Analysts at TD Securities increased their price objective on shares of Amazon.com, Inc. (NASDAQ:AMZN) from $225.00 to $245.00 on 10th July. A total of 302 hedge funds tracked by the Insider Monkey database held stakes in Amazon.com, Inc. (NASDAQ:AMZN), up from 293 in the preceding quarter.
Diamond Hill Capital, an investment management company, released its second-quarter 2024 investor letter and mentioned Amazon.com, Inc. (NASDAQ:AMZN). Here is what the fund said:
“Among our top individual contributors in Q2 were Amazon.com, Inc. (NASDAQ:AMZN), Texas Instruments and Mr. Cooper Group. Internet retail and cloud infrastructure company Amazon is benefiting from strong profitability, particularly in its Amazon Web Services (AWS) business. Shares also received a boost amid growing optimism around the demand for AWS as Amazon customers’ investments in generative AI projects continue growing.”
While we acknowledge the potential for Amazon.com, Inc. (NASDAQ:AMZN), our conviction lies in the belief that AI stocks hold greater promise for delivering strong 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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