11. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
As part of his breakdown of the Magnificent 7 stocks, Jim Cramer described Amazon.com Inc. (NASDAQ:AMZN) as one of the few remaining standouts. He argued that Amazon’s pricing power, scale, and diversified revenue streams make it well-positioned to handle rising tariffs and supply chain disruptions.
“Right on top of the list [of the magnificent 7] is Amazon. The main knock against Amazon is that the tariffs will crush their core e-commerce business. After all, most of this stuff is made overseas and it’s about to get a lot more expensive. But I think they become more of a consumer staples business like Walmart, because they sell so many necessities at the best prices. Plus, all retailers have to deal with the tariff problem. Question is who has the scale to lean on their suppliers and force them to eat the cost of the tariffs? Nobody has more bargaining power than Amazon. It has all the cards. […]
Keep in mind that this company has a lot going for it, from the sticky prime subscription business that engenders customer loyalty, to the Amazon web services business that has enough growth to offset any weakness in retail with excellent margins. Amazon currently trades at around 25 times this year’s earnings estimates; about half of its historical valuation. That makes it a steal frankly.”
Alphyn Capital Management stated the following regarding Amazon.com Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Amazon continues to demonstrate how a massive balance sheet, combined with a relentless focus on customer satisfaction and first-principles thinking, can drive sustainable cash flow growth. Recent earnings highlight strong execution across multiple fronts. At its core, Amazon pursues what customers value most: faster, cheaper delivery. This quarter, 40 million users enjoyed free same-day shipping, reflecting management’s sizable investments in regional logistics. These moves have reduced service costs, supported margin expansion, and set the stage for continued improvements with further robotics integration.
Amazon has now achieved margin gains in its international operations, making that segment profitable. By emphasizing improvements on the “intake” side of the supply chain and leveraging regional logistics, the company is laying the groundwork for more efficiencies ahead. Meanwhile, Amazon’s advertising business saw $14.3 billion in revenue, up 19% year-over-year, a clear example of the company’s success in forging new, high-margin revenue streams. Amazon Web Services and AI-related offerings also grew 19%, pushing quarterly revenues near $30 billion. Management spent $75 billion in capex this year, mainly for AI infrastructure, which will increase to $90 billion next year. While those numbers look daunting, I have confidence in the company’s ability to balance aggressive growth with disciplined returns, given Amazon’s decades-long track record of smart capital allocation. Amazon has a ruthless focus on “what works,” for example, while shutting down its project (with JP Morgan and Berkshire) to change healthcare service proved too complex, it pivoted to high-velocity pharmacy deliveries, leveraging its logistics expertise.
Of course, AI is all the rage right now, and we will eventually find out how much of this is hype. For now, Amazon’s AI initiatives are already producing multibillion-dollar revenues and growing at triple the rate of AWS when it was at a similar stage.”
