1. Amazon.com, Inc. (NASDAQ:AMZN)
Market Cap: $1.937 Trillion
5-Year Net Income CAGR: 29.71%
TTM Net Income: $44.42 billion
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) is one of the biggest technology and e-commerce companies in the world. Its operations span e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence industries. The company tops our list of most profitable blue chip stocks.
Its operations are divided into three segments: North America, International, and Amazon Web Services (AWS). For consumers, the company offers a wide selection of products through online and physical stores and emphasizes low prices, fast delivery, and customer service.
One of Amazon’s (NASDAQ:AMZN) significant projects is Kuiper Systems LLC, also known as Project Kuiper. It is a subsidiary of the company founded in 2019 and provides global broadband internet through a satellite constellation in low Earth orbit. The company has invested a substantial amount of money in the project to make it an important player in satellite-based internet services.
On October 10, Morgan Stanley analyst Brian Nowak reiterated a Buy rating for the company stock due to the firm’s confidence in Project Kuiper. Although Kuiper’s costs, including launch expenses, hardware, and R&D, are complex, the analyst views the financial impact as manageable.
He acknowledged the project’s delays but believes Amazon (NASDAQ:AMZN) can absorb the estimated $1.5 billion EBIT hit in 2025, which is minimal compared to its projected $75-$80 billion EBIT. Nowak remains optimistic about the company’s financial strength and ability to handle the timing of cost recognition.
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 potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher 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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