4. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders as of Q4: 338
SICM’s Equity Stake: $14.70 Million
Amazon.com, Inc. (NASDAQ:AMZN) is a global leader in technology, excelling in e-commerce, cloud computing, digital streaming, online advertising, and artificial intelligence. Its diverse portfolio includes major subsidiaries such as Amazon Web Services (AWS), Zoox, Ring, Twitch, IMDb, Kuiper Systems, Whole Foods Market, and Amazon Lab126, allowing the company to expand its presence across multiple industries.
Amazon.com, Inc. (NASDAQ:AMZN) showcased strong financial growth in Q4 2024, reporting $187.79 billion in revenue—a 10% increase from the same quarter of the previous year—while slightly surpassing analyst expectations. Its earnings per share (EPS) of $1.86 exceeded projections by 25.3%, reinforcing its consistent profitability. With its dominant market position, ongoing innovation in high-growth industries, and robust financial performance, the company remains an attractive investment. Its ability to drive revenue across various sectors while maintaining long-term stability makes it a top choice for investors looking for both growth and resilience in the tech industry.
Morningstar increased Amazon.com, Inc. (NASDAQ:AMZN)’s fair value estimate to $240 per share, up from $200, following strong fourth-quarter results. Despite currency-related revenue challenges and rising capital expenditures, the company exceeded expectations, with revenue growing 10% year-over-year to $187.8 billion. AWS and advertising, two key drivers of long-term growth, expanded by 19% and 18%, respectively. The company’s operating profit reached $21.2 billion, surpassing projections, while its margin improved to 11.3% from 7.8% a year prior. With $101.2 billion in cash and $52.6 billion in debt, its financial position remains solid. Free cash flow is expected to normalize as previous investments in infrastructure and content balance out. Amazon.com, Inc. (NASDAQ:AMZN) continues to enhance efficiency through robotics and its multi-hub strategy. The company’s leadership in e-commerce, cloud computing, and advertising, combined with consistent financial growth, makes it a compelling stock. Its strong fundamentals and market dominance suggest a sustained long-term value for investors.
Recurve Capital stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) – 5.1% of assets as of 12/31/2024
Amazon has been an agent of disruption for a long time in retail, cloud computing, and beyond. Its consumer business is incomparable for small parcel, general merchandise. Prime delivery windows keep shrinking, which keeps pulling more market share Amazon’s way. It has an amazing transportation, fulfillment, and logistics network capable of service levels that were unthinkable at current prices just a couple decades ago. Additionally, AWS is a leader in cloud verticalization, powered by proprietary semiconductors, hardware, software, facilities, and more. Amazon’s customer-centricity is the driving force behind its continuous innovation and disruption. As the juggernaut disruptor, it is likely the world’s best company at solving really hard problems for customers at massive scale.
Amazon does not trade at a mid-single multiple of medium-term FCF/share or EPS. Our cost basis was less than 10x our estimate of 2028 FCF. However, few companies reinvest at the rate Amazon does and, theoretically, it could double the free cash flow I model simply by moderating its reinvestments for a year or two – but that may not be a great outcome for long-term investors. This is why it is important to evaluate companies based on owner’s earnings, not reported earnings. For instance, a private owner of Amazon might shut down Project Kuiper and Alexa and massively increase EPS and FCF/share.”
