Tsai Capital, an investment management company, released its fourth quarter investor letter. A copy of the letter can be downloaded here. Tsai Capital celebrated 25 years track record in 2024. Tsai Capital Growth Equity Strategy gained 23.0% after fees, and 24.5% before fees in 2024 compared with a total return of 25.0% for the S&P 500 Index. The strategy gained 604.5% cumulatively after fees, and 886.4% before fees since its inception 25 years ago compared to 526.7% total return for the S&P 500 Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Tsai Capital highlighted stocks like Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter. Amazon.com, Inc. (NASDAQ:AMZN) provides consumer products, advertising, and subscription services through online and physical stores that operate through North America, International, and Amazon Web Services (AWS) segments. The one-month return of Amazon.com, Inc. (NASDAQ:AMZN) was 7.65%, and its shares gained 48.84% of their value over the last 52 weeks. On January 29, 2024, Amazon.com, Inc. (NASDAQ:AMZN) stock closed at $237.07 per share with a market capitalization of $2.493 trillion.
Tsai Capital stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) (AMZN—Year of First Purchase: 2017) Amazon was founded by Jeff Bezos in his garage in 1994 and today dominates the markets it serves. The company’s e-commerce business is gaining market share, despite its immense size, while its cloud services division, Amazon Web Services (AWS), is by far the leading cloud provider. We estimate that AWS now generates 60-65% of the company’s total operating profits.
Both Amazon retail and AWS benefit from numerous competitive advantages and deliver a high customer value proposition. Rather than leveraging its size to maximize short-term profits, the company follows a scale-economies-shared business model, sharing a generous portion of its margin with the consumer. This creates a flywheel effect that reinforces the company’s ecosystem.
Amazon’s approach of investing heavily in the business today to create shareholder value later masks the company’s underlying earnings power. As consumers continue to shift their spending from in-store purchases to online shopping, and as data continues to migrate from on-premise servers to the cloud, we expect Amazon to grow revenues at a low double-digit rate for at least the next five years and to significantly increase its operating margins.”
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN) is in first position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 286 hedge fund portfolios held Amazon.com, Inc. (NASDAQ:AMZN) at the end of the third quarter which was 308 in the previous quarter. In the third quarter, Amazon.com, Inc. (NASDAQ:AMZN) delivered $158.9 billion in revenue, up 11% year-over-year. 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Amazon.com, Inc. (NASDAQ:AMZN) and shared the list of non-tech AI opportunities amid DeepSeek selloff. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.