We recently published a list of 10 Best Stocks to Buy According to Billionaire Ray Dalio. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other best stocks to buy according to billionaire Ray Dalio.
Ray Dalio, with over 50 years of experience, is arguably one of the most influential investors on Wall Street. Having accurately predicted the 2008 financial crisis, he is often looked upon for insights and the direction the market will likely take in times of uncertainty. He is the brains behind Bridgewater Associates, a hedge fund he founded in 1973, which leverages various strategies, including Pure Alpha and macroeconomic analysis, to squeeze optimum returns in the markets.
While Dalio gave up his CEO role at Bridgewater Associates in 2017, his sentiments still influenced the hedge fund’s investment strategy and play. Likewise, the hedge fund has remained on top of its game, generating an average return of 11.5% annually while leveraging the Pure Alpha Strategy.
READ ALSO: Paul Singer’s Latest Portfolio: Top 10 Stock Picks and 10 Best Stocks to Buy According to Seth Klarman.
The outperformance comes as the overall equity market has been in an uptrend amid the artificial intelligence-driven run. Likewise, the US economy staying clear of recession amid high interest has bolstered sentiments about market risk-taking.
Even though the overall equity market has been in an uptrend, billionaire Ray Dalio is sounding the warning bells about an imminent debt crisis. The fact that the US debt-to-GDP ratio has risen to over 122% poses significant risks, according to the founder of Bridgewater Associates.
Over the last two quarters, GDP has been gradually increasing, and unemployment and inflation have been relatively stable. However, Ray Dalio has warned that America’s national debt is a problem that is imminently coming and that it will rock the boat. According to Dalio, the US deficit must drop from a projected 7.2% of gross domestic product to about 3% of GDP.
“We have a very severe supply and demand problem. Some people think we’ll handle it because we’ve handled it so far. I don’t think they understand the mechanics of debt.” Dalio said
Dalio’s caution comes as President Donald Trump’s administration struggles to retain significant tax cuts while simultaneously cutting the annual deficit, which most recently hit $1.8 trillion.
According to Dalio, President Trump has undoubtedly shown that he is not afraid to use economic pressure to further his objectives. An examination of his executive orders since assuming office is sufficient proof that he has what it takes to reduce the US deficit and heightened debt levels.
However, the Oval Office might have lost some of its goodwill with the countries that would have hurried to its aid by inflicting pain through trade tariffs. Uncertainty around trade policy has exacerbated investor anxiety on Wall Street as they worry about how a potential trade war will affect the world economy.
Tariffs against Canada, Mexico, and China are part of Trump’s trade policies, which are intended to rebalance the economy to America’s advantage. Nevertheless, they have the potential to trigger an economic slowdown and higher inflation.
Even as Dalio remains concerned about the US debt levels and the uncertainty triggered by trade wars, he remains bullish about the US equity markets. Bridgewater Associates’ portfolio has significant exposure to tech stocks as it looks to benefit from the AI spectacle.
Our Methodology
To make the list of the 10 Best stocks to buy, according to billionaire Ray Dalio, we selected the top 10 stocks in Bridgewater Associates’ portfolio as of its Q4 2024 13F filing. We settled on the hedge fund’s ten biggest holdings and examined why they stand out as Ray Dalio’s top stock picks. Finally, we ranked the stocks in ascending order based on the value of Bridgewater Associates equity stakes. Additionally, we have mentioned the hedge fund sentiment around each stock, as of Q4 2024.
At Insider Monkey, we are obsessed with 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).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
Bridgewater Associates Equity Stakes: $201.79 Million
Number of Hedge Fund Holders: 339
Amazon.com, Inc. (NASDAQ:AMZN) is a technology giant that offers an array of internet-based businesses, including e-commerce, cloud computing and digital streaming. It’s also investing in artificial intelligence features and services to strengthen its robust product portfolio. While the stock only gained 12% in 2024, it remains one of the best stocks to buy, according to billionaire Ray Dalio, owing to its growth prospects.
Amazon.com, Inc.’s (NASDAQ:AMZN) edge as one of the best stocks stems from the integration of artificial intelligence across its entire business line to drive efficiency and generate more revenue. The company is already using AI to forecast demand and optimize inventory in e-commerce. It also offers generative AI tools that help brands create cost-effective and efficient advertising campaigns across media types, drawing more advertising budgets.
As a market leader in cloud computing, it has already started designing custom chips to provide cheaper alternatives to Nvidia’s expensive GPUs for treating AI models. Amazon customers’ desire to test and deploy artificial intelligence (AI) applications is driving up demand for AWS. The wave of AI integration was the catalyst behind Amazon.com, Inc. (NASDAQ:AMZN) posting an 11% year-over-year revenue increase in 2024 to $638 billion. The revenue increase was mostly driven by robust advertising and cloud service sales growth.
Overall, AMZN ranks 8th on our list of best stocks to buy according to billionaire Ray Dalio. 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 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.
