1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) is a global powerhouse in the retail industry, offering a wide array of consumer products through both online and physical platforms. Recently, Jim Cramer discussed Wells Fargo’s downgrade of Amazon. He noted the stock’s drop from $184 to $161 but its recent rise to $186. He said:
“First downgrade, Amazon by Wells Fargo titled “Positive Revision Story on Pause Reducing to Equal Weight”. Totally get it, lots of headwinds, stock’s abused from the so-called bad quarter when Amazon fell from $184 to $161. Since then, it’s traded as high as $195, but it’s $186 as of last week. It’s time to sell? I’m not so sure.
What do these analysts fear? Amazon spending a lot on a ton of initiatives, worries about Walmart impact. So there’s a slight estimate cut, too. Wait a second. I say. How many times, how many times has Amazon been up against headwinds? Do you know how many times the company’s made some inexplicable moves? This is nothing new. Yet Amazon has always come back. It’s in their culture. It’s in their DNA. It always does.”
Cramer emphasized that the company has historically faced challenges and always rebounded. He suggested that while the stock may dip, he believes it will recover again. He added:
“I remember a year and a half ago when I was screaming at them because Amazon Web Services was underperforming. Came right back. Last time they reported, I was in disbelief at the Olympics and the attempted assassination of Donald Trump led to a light third-quarter sales guide. I was apoplectic at the Alexa losses and what happens? Comes right back.
So I say knock yourself out and sell it if you have to. Let me ask you, did you sell Amazon at $161 after that last supposedly bad quarter? How did it feel when the stock didn’t bounce to $195? Once again, I think it’s just a matter of time before Amazon bounces back. As usual. No hurry. Stock does seem to be headed lower, I’ve no doubt about that. I get it. But sell to buy it lower? Can you really get back in that? Too hard.”
While Amazon (NASDAQ:AMZN) generates a significant portion of its revenue from its retail operations, it finds a substantial share of its profits through Amazon Web Services (AWS), which stands as one of the largest cloud infrastructure providers worldwide. This segment operates with considerably higher margins compared to retail.
The ability to provide discounts, free shipping, and affordable hardware options for Prime members has been pivotal in Amazon’s (NASDAQ:AMZN) growth strategy. With over 200 million Prime subscribers globally, the company has cultivated a loyal customer base. As of the second quarter of 2024, AWS commanded a significant 33% share of the cloud infrastructure market.
It reported mixed outcomes in its second-quarter earnings report. The company saw revenue rise by 10% to reach $148 billion, which fell slightly short of analysts’ expectations. However, it reported a notable increase in GAAP net income, which surged 94% to $1.26 per share, exceeding forecasts.
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ: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 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.
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