We recently published a list of Top 10 AI News and Analyst Ratings You Should Not Miss. Since Amazon.com Inc (NASDAQ:AMZN) ranks 1st on the list, it deserves a deeper look.
Investors are on tenterhooks as Jensen Huang’s AI giant is about to release earnings. Gene Munster, Deepwater Asset Management managing partner, said in an interview with CNBC that the broader market can see a pullback if Blackwell-related delays show a wider impact on the AI chips market. The analyst predicted that it’s going to be a “difficult week” for major tech companies.
However, Munster is highly bullish on the broader AI space for the long term.
“I still think that we are in an early innings of a 3 to 5 year tech bull market that is powered by AI, and I think all these big tech companies are going to do well over the next couple of years,” Munster said.
The analyst said that Jensen Huang has indicated in the previous quarters that the demand for AI chips is more than what his company could manage in the short term, and if he reiterates this in the upcoming results, it would give a strong signal to investors about the AI potential.
“There is a lot of awareness about AI but I think the significance of what it’s gonna do is still underappreciated by the market.”
In this article, we compiled the most important latest AI news and analyst ratings around major AI tech stocks. With each company we have mentioned the number of hedge fund investors. 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).
Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 308
Mark Mahaney, Evercore ISI head of internet research, recently reshuffled his portfolio after which Amazon.com Inc (NASDAQ:AMZN) is one of his three top picks. During a CNBC program, the analyst said that many are still questioning whether major companies like Amazon.com Inc (NASDAQ:AMZN) will get any returns on their AI investments. He thinks, “if you look hard enough” you will see these tech companies have started to get a “little bit of a bang” on the bucks they are spending.
For Amazon, Mahaney likes “AWS growth acceleration.”
AWS’s revenue growth accelerated from 17.2% in Q1 to 18.8% in Q2, driven by a shift from on-premises infrastructure to cloud solutions and increasing demand for AI capabilities. Amazon.com Inc (NASDAQ:AMZN) advertising segment added over $2 billion in revenue year-over-year, indicating significant potential in video advertising and opportunities within Prime Video offerings.
Like other tech companies, fears stemming from high CapEX are keeping investors on the sidelines. Amazon.com Inc (NASDAQ:AMZN) spending is expected to rise amid broadband project Project Kuiper and AI growth. Investors are still figuring out whether AI monetization and ROI will come anytime soon. Amazon.com Inc (NASDAQ:AMZN) is also facing a slowdown in consumer spending, especially for higher-ticket items like electronics and computers.
Based on Amazon.com Inc (NASDAQ:AMZN) Q3 guidance, its revenue growth would be 11%. The stock is trading 35x its fiscal 2025 earnings estimates set by Wall Street. This shows the stock is fairly priced and investors looking for strong growth could look elsewhere.
Diamond Hill Select Strategy 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, Amazon.com Inc (NASDAQ:AMZN) ranks 1st on Insider Monkey’s list titled Top 10 AI News and Analyst Ratings You Should Not Miss. While we acknowledge the potential of AMZN, 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.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. This article is originally published at Insider Monkey.
