We recently published a list of Top 10 Trending Stocks Now. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other top trending stocks now.
The volatile tariff policies of the new US administration and a slowdown in AI-related enthusiasm took a toll on the market over the past few weeks. However, some analysts believe a rebound is due.
Fundstrat’s Tom Lee said in a latest program on CNBC that he believes the US stock market will begin to recover starting April 2. Here is how Lee explained the reasons behind his positive outlook:
“When markets fall this quickly from a 52-week high, just remember less than a month ago we were at all-time highs. That is a market pricing in a crisis. I’d say almost 50% pricing in a recession, and we’re assuming there’s no Fed put now. The Fed is in a position to cut rates that really should mitigate the downside. I do think two other things that investors have to keep in mind, because many people just want to get out until April 2nd, is number one, I do think there’s a very high probability that a tariff solution happens before the next three weeks happens. It’s simple to see because China, Europe, Canada, Mexico since April 18th—all of those countries have outperformed the US. I don’t think that markets are that blind to say if Canada and Mexico are about to have a recession, they should outperform the US. The second thing people should keep in mind is that when you have a global crisis brewing—and we highlighted like the 1962 Cuban Missile Crisis—that was a 12-day crisis, but the markets bottomed seven days into the crisis, five days before that crisis ended, the market had already recovered two-thirds of the losses.”
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For this article, we picked 10 stocks notable Wall Street analysts were discussing recently. With each stock we have mentioned its latest hedge fund sentiment. 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Funds Investors: 286
Evercore ISI’s Mark Mahaney mentioned in a latest program on CNBC why he believes Amazon.com, Inc. (NASDAQ:AMZN) is a cheap stock and discussed two key potential upcoming growth catalysts:
“At 25 times earnings, I think that’s the cheapest multiple you’ve ever had a chance at looking at Amazon. Here are the two product catalysts coming up: we’ve got a Kuiper launch, so this is going to be a long-term build. I’m really intrigued by Amazon’s ability to succeed in broadband satellite internet access, which I think is a really interesting market that Starlink has shown us. Then you’ve got Alexa Plus coming to your Alexa device, and there are 600 million of these worldwide. So I think there’s an interesting Trojan horse out there that could get generated and become a lot more useful. In terms of the narrative shifting, I’m particularly intrigued by the ability of AWS, their cloud business, to re-accelerate in the back half of the year. I spent a lot of time with private companies here in San Francisco, in the Valley, and we’re seeing dramatic growth rates for some of these private companies in terms of ramping up their revenue at the application layer. I think AWS is the company those app developers are most relying on, and I think that’s going to start showing up in the numbers. If you get an acceleration in the highest-margin business in Amazon, that’s a good thing. You want to buy the stock ahead of that.”
Despite weak guidance, Amazon could easily surpass $100 billion in operating income within the next two years because of its AWS growth engine. In the latest quarter, Amazon Web Services sales jumped 19% and operating profit for the segment jumped 62% in 2024 on an annual basis.
The market is currently forecasting $6.27 per share in profits this year (a 13% YoY growth) and $7.59 per share next year (a 21% YoY growth). Amazon’s stock is priced at a profit multiple of 30.2x. This valuation might look rich, but when we incorporate AWS growth, the stock seems to have more upside potential.
RiverPark Large Growth Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN): Amazon was our top contributor in the fourth quarter following third quarter results of slightly better than expected revenue and much stronger than expected operating income. 3Q operating income of $17.4 billion exceeded company guidance of $11.5-15 billion (and Street estimates of $14.7 billion), driven by margin expansion across all three major segments, including gross/net margins of 38% at AWS, up from 30%. In addition, the company reported an acceleration in e-commerce demand both domestically and internationally, and accelerated growth of Prime paid memberships. The company guided to 4Q operating income of roughly $18 billion driven by the same positive factors that impacted 3Q.
With its ability to continue its market share gains in its three leading businesses (e-commerce, web services and online advertising), plus a multi-year operating margin expansion opportunity (from improved e-commerce margins and greater contribution from the faster growing, higher margin AWS and advertising segments), we believe Amazon remains one of the best-positioned global growth companies in the world.”
Overall, AMZN ranks 1st on our list of top trending stocks now. While we acknowledge the potential of AMZN, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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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Disclosure: None. This article is originally published at Insider Monkey.
