6. Amazon.com, Inc. (NASDAQ:AMZN)
Warren Buffett’s Q2 2024 Stake: $1.93 Billion
Analyst Upside Potential, as of September 26: 15.96%
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) is arguably one of the best Warren Buffett Stocks to buy, according to analysts. It’s a market leader in e-commerce and cloud computing. Additionally, the company’s increased focus on artificial intelligence has made it a firm favorite amid the AI frenzy.
Amazon.com, Inc. (NASDAQ:AMZN)’s entry into the generative AI sector has generated the highest level of excitement for its stock in the last 24 months. Yet, the truth behind this excitement goes beyond mere speculation. Users of Amazon’s AI offerings are discovering real benefits from them. As Amazon continues to pour resources into enhancements and new functionalities, it ought to maintain its leading role in cloud computing and secure a larger portion of the market.
Thanks to the integration of AI features, Amazon.com, Inc. (NASDAQ:AMZN) recorded an 18.8% increase in sales growth in the second quarter under its cloud computing unit, Amazon Web Services. While AI represents one of the biggest catalysts that continue to fuel Amazon’s underlying growth, advertising is also emerging as an important segment.
Amazon.com, Inc. (NASDAQ:AMZN)’s advertising division has been one of its most rapidly expanding areas, experiencing a 20% increase in revenue from the previous year, or a $2 billion rise. It already boasts unparalleled visibility for advertisers looking to reach Amazon shoppers through its sponsored ads on its online shopping site, and its latest feature, an ad-supported Prime video service, is opening up new avenues for both advertisers and Amazon.
The online shopping sector is also showing steady growth, with more units sold than in sales as shoppers look for cheaper deals. Growth in e-commerce and advertising on the cloud should continue diversifying and strengthening Amazon.com, Inc. (NASDAQ:AMZN)’s revenue base, allowing it to generate long-term value.
While the company trades at a premium with a price-to-earnings multiple of 32, it is expected to enjoy robust growth in various segments. Analysts on Wall Street rate the stock as a buy with a $223.25 price target, implying 15.96% upside potential.
Overall, AMZN was held by 308 hedge funds, and Fisher Asset Management was the largest shareholder.
Meridian Hedged Equity Fund mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter. Here is what the firm said:
“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.”
