1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com Inc (NASDAQ:AMZN) ranks first on our list of the 10 safe stocks to invest in now. Amazon.com Inc (NASDAQ:AMZN) is a technology company that specializes in e-commerce, online retail, streaming, and data cloud services. Its e-commerce platform is functional in 20 countries and ships to over 100 countries.
The company was first launched in 1994 and is on track to capture over 40% of the e-commerce market in the United States. Its proprietary cloud service, Amazon Web Services (AWS), increased its revenue by 17.2%, year-over-year in Q1 to 18.8% in Q2. AWS has logged 30% plus operating margins consistently for the past five quarters.
Amazon.com Inc (NASDAQ:AMZN) is also spearheading the AI transformation. Over the past few months, the company has partnered with AI startups like Anthropic and signed deals with the US government to test new AI models. In July, the e-commerce giant processed a new server design, similar to the ones produced by NVIDIA. The company’s investment in hardware is not recent. Its non-AI computing chip, Graviton, has been under development for almost a decade now. More recent chips by the company include Trainium and Inferentia. On Prime Day, Amazon deployed a quarter million Graviton Chips and 80,000 custom AI chips to manage the surging activity on its platforms.
Analysts are bullish on AMZN and their 12-month median price target of $220 points to a 25% upside from current levels. Overall, AMZN was held by 308 hedge funds at the close of Q2 2024 with total stakes amounting to $65.85 billion. As of June 30, Fisher Asset Management was the largest shareholder with a position worth $8.46 billion.
AMZN is currently trading at 38 times this year’s earnings estimate and the sector forward P/E is 16. While AMZN is trading at a higher multiple, its earnings are expected to grow by 63% this year to $4.73.
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, AMZN ranks first among the 10 safe stocks to invest in now. While we acknowledge the potential of data cloud companies, 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 the stocks mentioned on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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