We recently published a list of the 12 Best Long-Term Growth Stocks to Buy Now. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other best long-term growth stocks to buy right now.
Expectations Regarding Fed’s Rate Cuts in 2025
Released on Friday, February 7, the January jobs report showed resilience in the labor market with higher-than-expected wage growth. December’s monthly job gains also showed an upward revision, highlighting that the US labor market ended 2024 in a better position than previously reported. Economists are thus of the opinion that the Federal Reserve may not cut rates in the near future. Consequently, this increases pressure on inflation data to cool down before the central bank considers slashing borrowing costs.
On January 30, Jeffrey Gundlach, CEO of DoubleLine Capital, appeared on CNBC’s “Closing Bell” to discuss the stock market and the Fed’s decision to leave rates unchanged. Sticking to the opinion he gave in December, Gundlach was of the view that 2025 would bring a maximum of two rate cuts by the Fed. He reiterated that he was not predicting two cuts but that two would be the maximum number attained in 2025, keeping one rate cut as the base case for the year. The unemployment rate went up for several consecutive months before ticking down, which Gundlach thinks is a matter of deep solace for the chair of the Federal Reserve, Jerome Powell.
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What Does the 2025 Outlook for the Stock Market Look Like?
On February 10, Mary Ann Bartels, Sanctuary Wealth’s chief investment strategist, appeared on CNBC to discuss the 2025 outlook for the stock market. She showed bullish sentiment towards the market, particularly due to strong earnings growth. Comparing the current environment to previous periods of innovation, such as the 1920s and the 1990s, Bartels highlighted the role of robotics, AI, and Web3 in driving long-term growth in the present.
She noted that companies today fund investments with cash and equity rather than excessive leverage, unlike the 1990s. Her estimates showed that the S&P could reach 7,200 to 7,400 this year and 10,000 to 13,000 by the decade’s end, as she expects the bull market to extend through 2029 to 2030.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 20 growth stocks. We checked their 5-year revenue growth (at least above 15%) and then selected the top 12 most popular stocks among elite hedge funds as of fiscal Q3 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
5-Year Revenue Growth: 17.86%
Number of Hedge Funds: 286
Amazon.com, Inc. (NASDAQ:AMZN) is a multinational technology company that provides online retail shopping services. It operates through the North America, International, and Amazon Web Services (AWS) segments. Its AWS segment covers global sales of storage, computers, databases, and other services for government agencies, academic institutions, startups, and enterprises.
Amazon.com, Inc.’s (NASDAQ:AMZN) e-commerce standing lends it a significant competitive advantage, as it holds nearly 38% of all e-commerce sales in the US. According to the Boston Consulting Group, e-commerce is expected to continue growing as a percentage of retail sales, reaching around 41% of global retail sales by 2027. This is anticipated to prove substantially beneficial for Amazon.com, Inc. (NASDAQ:AMZN).
The company is also investing heavily in AI. Its capital expenditures (capex) for 2025 are anticipated to be around $100 billion, a majority of which would go to AI. The company also said that falling AI inference expenses would fuel increased AI infrastructure spending.
Ariel Appreciation Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“During the quarter, we initiated three new investments, each in companies we have followed closely for a considerable time. At various points, we viewed them as missed opportunities; however, our experience with Mr. Market has taught us that patience often creates inevitable entry points. This quarter, some exciting opportunities presented themselves. The three investments are Amazon.com, Inc. (NASDAQ:AMZN), Diageo (NYSE: DEO), and Uber (NASDAQ: UBER). We will discuss each in detail below.
Amazon is one of the most widely followed companies in the world. While the “Magnificent 7” (of which Amazon is a key member) is often seen as a runaway freight train, we were able to purchase Amazon shares at prices last seen in 2021—three years ago. How is this possible if the “Mag7″ has been so dominant? We believe it largely reflects the increasing prevalence of narratives driving market sentiment…” (Click here to read the full text)
Overall, AMZN ranks 1st on our list of best long-term growth stocks to buy right now. While we acknowledge the potential of AMZN, our conviction lies in the belief that 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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Disclosure: None. This article is originally published at Insider Monkey.
