We recently published a list of Top 10 Latest AI News, Earnings and Analyst Ratings You Should Not Miss. Since Amazon.com Inc (NASDAQ:AMZN) ranks 1st on the list, it deserves a deeper look.
Tech stocks are continuing to decline amid fears the Fed is taking too long to begin interest rate cuts, stoked by the latest jobs data that showed unemployment is rising. However, some analysts believe the latest decline in AI stocks is part of a normal market rotation and gives investors an opportunity to buy. While talking to CNBC in a latest program, Michael Landsberg of Landsberg Bennett Private Wealth said that the latest decline is a “little bit of a reset, obviously.” The analyst said that AI stocks had a “great run” and the latest pullback is a “typical process” of market rotation.
“It doesn’t mean we are not positive longer term on AI but when you have big runs like that that’s why you rebalance portfolios to keep the risk in check,” Landsberg said.
Asked if the AI bubble has popped and this is the end of the AI hype, the analyst said “absolutely not” and called the recent pullback “deceleration” from growth and “normalization.”
Landsberg said that the earnings season will “separate the wheat from the chaff” and believes major tech companies will still drive earnings in the future.
For this article, we scanned the latest AI news, earnings, and analyst ratings and picked the 10 biggest stocks moving on these developments. 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).
Jeff Bezos of Amazon
Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 302
Amazon.com Inc (NASDAQ:AMZN) shares fell as investors digested the company’s latest quarterly report where revenue missed estimates and guidance came in soft despite AWS growth.
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 Latest AI News, Earnings and Analyst Ratings You Should Not Miss. While we acknowledge the potential of Amazon.com Inc (NASDAQ: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 Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
