1. Amazon.com, Inc. (NASDAQ:AMZN)
Coatue Management’s Stake Value: $2.34 billion
Number of Hedge Fund Holders: 339
Amazon.com, Inc. (NASDAQ:AMZN) is on analysts’ radars these days. BofA noted that Amazon Autos’ Director paid a visit on the Automotive News Daily Drive podcast, and mentioned about Amazon.com, Inc. (NASDAQ:AMZN)’s push into the automotive sector. Another area of growth is the company’s investments in AI, which possess the potential to fuel significant growth and efficiency improvements throughout the business segments. In e-commerce, AI can improve personalization, enhance demand forecasting, and optimize logistics. In AWS, AI capabilities can bring in more enterprise customers and increase the use of high-margin services. With respect to advertising, AI-powered tools can improve ad targeting and effectiveness for Amazon.com, Inc. (NASDAQ:AMZN).
With the e-commerce adoption increasing, mainly in emerging markets, Amazon.com, Inc. (NASDAQ:AMZN) is well-placed to leverage its logistics expertise and technological infrastructure in a bid to capture market share. Notably, Barclays analyst Kannan Venkateshwar maintained a “Buy” rating on the company’s stock, setting a price objective of $265.00. The investing community has been underestimating the AI boost that Amazon.com, Inc. (NASDAQ:AMZN) can get moving forward.
Burke Wealth Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Amazon.com, Inc. (NASDAQ:AMZN): Whereas most of the discussion around Amazon focuses on trends in its AWS business, our focus has been on the progression of margins in its retail business. Happily, both units appear to be on the upswing which drove strong fourth quarter share price performance. In AWS, Q3 sales growth was a solid 19% and the run rate of the business is now $110B. Equally encouraging is that margins were 38%, marking the third consecutive quarter that AWS operating margins were in the 36%-38% range after spending the last two years in the 28% range. This margin gain is being driven by demand for higher value applications as well a benefit from extended life usage across its data center architecture. On the retail front, the margin story remained in full force with North American margins reaching 5.9% in the third quarter and International margins delivering positive results (+3.6%) for the third straight quarter after 10 straight quarters in negative territory. CEO Andy Jassey has pointed out that Amazon’s efforts to reconfigure its distribution network from a centralized to a regional network has yielded productivity gains and that he sees no reason why retail margins in North America can’t meet or exceed previous record levels. We think a consistent run towards the high-single-digit range is likely. International retail sustaining profitability would be an added bonus and this great white whale finally seems within our grasp as Amazon reaches critical mass across numerous large international markets.”
While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued 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: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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