We recently compiled a list of the 10 Best 5G Stocks To Buy According to Short Sellers. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against the other 5G stocks.
5G, or fifth-generation wireless technology, is the latest evolution in mobile networks, which is designed to significantly improve speed, reduce latency, and enhance the capacity and connectivity of mobile devices. A Market Research Future report estimates that in 2024, the 5G market is projected to be worth $15.03 billion, and by 2032, it could reach $229.41 billion. This rapid increase represents a compound annual growth rate (CAGR) of 40.60% during the forecast period. According to some experts, 5G is one of the most important trends in technology along with artificial intelligence (AI).
5G and AI Could be Catalysts of Global Digital Transformation
In a CNBC interview at the Mobile World Congress Shanghai on June 26, director-general of the GSM Association, Mats Granryd highlighted the deep connection between 5G and AI and suggested that their mutual rise is not accidental. He said that “AI feeds off 5G and 5G feeds off AI.” This is especially evident in China, where the development of standalone 5G networks is well advanced and discussions are already shifting toward 5G Advanced (5.5G). While some countries lag, like the Philippines, Mats pointed out that this dynamic between 5G and AI is most prominent in regions with widespread 5G coverage.
When asked about the rivalry between countries like the U.S. and China in AI and 5G, Mats said that such competition is insignificant. He said that from his experience on the GSMA board, which represents the 25 largest mobile operators globally, the focus is on creating common standards and specifications rather than competing.
He talked about the difficulties of the 2G and 3G eras when different technologies created challenges for global connectivity. The shift to a unified 4G standard was a pivotal moment that laid the foundation for the digital economy.
Mats believes that 5G will follow a similar path to become a common platform worldwide, which will also extend to AI. While some regions may advance faster than others initially, he showed confidence in the fact that everyone will eventually catch up and benefit from the integration of AI with 5G.
Our Methodology
For this article, we used stock screeners and ETFs to identify companies involved in the 5G market. We then selected 10 stocks with the smallest short interest and listed them in descending order of their short interest. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Amazon.com, Inc. (NASDAQ:AMZN)
Short Interest as % of Shares Outstanding: 0.68%
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) is a global technology company known for its various offerings in e-commerce, cloud computing, digital streaming, and AI. While it is widely recognized for its e-commerce platform and Prime membership, it has also made advancements in the 5G technology sector through its cloud computing arm, Amazon Web Services (AWS). It is one of the best 5G stocks to buy according to short sellers.
AWS provides a variety of solutions tailored for the development and management of 5G networks, including AWS Private 5G, Edge Computing for 5G, and AWS 5G Core Network Solutions. AWS Private 5G is a managed service designed to assist businesses in setting up, managing, and expanding their own private 5G networks on their premises.
In addition, AWS partners with telecom operators such as Verizon to aid in their 5G deployments. AWS also offers edge computing solutions, including AWS Outposts, which enable telecom providers to deliver computational power directly to businesses.
In the second quarter, 308 hedge funds had stakes in Amazon (NASDAQ:AMZN), with total positions worth $65.8 billion. As of June 30, Fisher Asset Management is the most significant shareholder in the company with a stake worth $8.46 billion.
Amazon (NASDAQ:AMZN) is well-positioned to capitalize on the growing need for cloud computing and data infrastructure, which are crucial for the expansion of 5G networks. As the adoption of 5G technology progresses, there is a rising demand for innovative cloud services and enhanced data processing capabilities, making AWS a key player in this space.
According to a media brand, CRN, AWS has a dominant position in the global cloud market, where it had a 31% share in the first quarter. This leadership is supported by the company’s extensive investment in product development, including custom AI chips and advanced software, which supports its growing role in AI cloud services.
Amazon (NASDAQ:AMZN) saw its total sales rise by 10% to $148 billion in the second quarter, with projections for the third quarter indicating a growth rate of 8% to 11%. AWS contributed $9.3 billion in operating income for the quarter, accounting for 63% of the company’s total operating income. CEO Andy Jassy highlighted that over the past 18 months, AWS has introduced more machine learning and generative AI features than all other major cloud providers combined. Furthermore, the company plans to invest nearly $150 billion in data centers over the next 15 years as it anticipates a surge in demand for AI cloud services.
Diamond Hill Capital stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“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.”
Overall AMZN ranks 2nd in our list of the best 5G stocks to buy according to short sellers. While we acknowledge the potential of 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 a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.