Top 10 Stocks to Buy According to Adage Capital Management

4. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders as of Q4: 339

Adage Capital Management’s Equity Stake: $1.96 Billion 

As of Q4 2024, Adage Capital Management held over 7 million shares of Amazon.com, Inc. (NASDAQ:AMZN), valued at over $1.9 billion. Hedge fund interest in the company also increased, with 339 funds tracked by Insider Monkey holding positions worth nearly $69.04 billion by the end of the quarter, up from 286 funds in Q3.

The company’s operating income for Q4 2024 surged to $21.2 billion from $13.2 billion the previous year, while net income doubled to $20 billion. AWS continued to drive growth, with a 19% increase in quarterly revenue to $28.8 billion. For the full year, Amazon.com, Inc. (NASDAQ:AMZN)’s net sales grew by 11% to $638 billion, with operating income nearly doubling to $68.6 billion and net income reaching $59.2 billion. The company reported record operating income of $68.6 billion, an 86% increase year-over-year, largely driven by the success of its cloud-computing division, Amazon Web Services (AWS). With enterprises increasingly turning to AWS for artificial intelligence (AI) applications, the division remains a key driver of Amazon’s long-term growth.

Despite posting strong financial results for 2024, Amazon.com, Inc. (NASDAQ:AMZN) experienced a 10.7% drop in its stock price in February. Investor concerns over the company’s aggressive capital expenditures have weighed on the stock. The company plans to spend $100 billion in the form of capital expenditures in 2025, a significant increase from $77.7 billion in 2024, with most of the investment focused on AI infrastructure for AWS. While CEO Andy Jassy remains confident in the strategy, investors worry that such high spending could hurt profit margins, especially since Amazon expects its full-year 2025 operating income to decline by $700 million. Historically, the stock has been sensitive to fluctuations in operating income, which may explain the market’s cautious response. However, Amazon.com, Inc. (NASDAQ:AMZN) remains a top stock to buy due to its dominant position in e-commerce and cloud computing, strong AI-driven growth in AWS, and long-term investment in cutting-edge technology despite short-term profitability concerns.

Parnassus Core Equity Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN) posted better-than-expected quarterly earnings, lifting investor confidence in the e-commerce giant’s ability to generate margin while continuing to invest into its large AI and retail end markets.

Amazon’s shares experienced volatility throughout the year as IT spending and the company’s margin structure came under scrutiny. Despite this, the stock outperformed as sentiment and results improved across both the overall environment for Amazon Web Services and the company’s ability to show margin.”