1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 286
Jim Cramer in a latest program on CNBC talked about the possible impact on chip demand following the DeepSeek launch. He believes chip demand from Amazon.com Inc (NASDAQ:AMZN) could have a strong effect on Nvidia’s stock price.
“I think the biggest issue is we got through the hurdle of Meta saying they need it. We know that Oracle needs it without a problem. We absolutely got that. We know that Apple wants anything it can get and they’re a free rider, they’ll be good. But we know that Microsoft needs more. But what we don’t know is Amazon.com Inc (NASDAQ:AMZN), and next week Amazon—what happens if Amazon says, It says, you know what, we don’t need as many, then you have this plummet.”
Tsai Capital stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) (AMZN—Year of First Purchase: 2017) Amazon was founded by Jeff Bezos in his garage in 1994 and today dominates the markets it serves. The company’s e-commerce business is gaining market share, despite its immense size, while its cloud services division, Amazon Web Services (AWS), is by far the leading cloud provider. We estimate that AWS now generates 60-65% of the company’s total operating profits.
Both Amazon retail and AWS benefit from numerous competitive advantages and deliver a high customer value proposition. Rather than leveraging its size to maximize short-term profits, the company follows a scale-economies-shared business model, sharing a generous portion of its margin with the consumer. This creates a flywheel effect that reinforces the company’s ecosystem.
Amazon’s approach of investing heavily in the business today to create shareholder value later masks the company’s underlying earnings power. As consumers continue to shift their spending from in-store purchases to online shopping, and as data continues to migrate from on-premise servers to the cloud, we expect Amazon to grow revenues at a low double-digit rate for at least the next five years and to significantly increase its operating margins.”
While we acknowledge the potential of Amazon.com Inc (NASDAQ:AMZN), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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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