We recently published a list of The 10 latest AI news, earnings and analyst ratings you shouldn’t miss. With Amazon.com Inc (NASDAQ:AMZN) at number 1 on the list, it deserves a closer look.
Stocks of technology companies continue to fall amid fears that the Fed is taking too long to start cutting interest rates. These fears are fueled by recent jobs data showing rising unemployment. However, some analysts believe the recent decline in AI stocks is part of a normal market rotation and provides investors with a buying opportunity. In a recent conversation with CNBC, Michael Landsberg of Landsberg Bennett Private Wealth said the recent decline is obviously a “mini reboot.” The analyst said AI stocks have had a “great run” and the recent decline is a “typical process” of market rotation.
“That doesn’t mean we’re not positive about AI in the long term, but when prices rise so much, you rebalance your portfolios to keep risk under control,” Landsberg said.
When asked if the AI bubble had burst and this was the end of the AI hype, the analyst replied “absolutely not” and described the recent decline as a “slowdown” in growth and a “normalization”.
Landsberg said that the earnings season will “separate the wheat from the chaff” and believes that the big technology companies will continue to drive earnings in the future.
For this article, we combed through the latest AI news, earnings, and analyst ratings and picked the 10 biggest stocks that moved on those developments. For each company, we mentioned the number of hedge fund investors. Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (More details can be found here).
Jeff Bezos of Amazon
Amazon.com Inc (NASDAQ:AMZN)
Number of hedge fund investors: 302
Amazon.com Inc (NASDAQ:AMZN) shares fell as investors digested the company’s latest quarterly report, in which revenue missed estimates and guidance was weak despite AWS growth.
AWS’s revenue growth accelerated from 17.2% in the first quarter to 18.8% in the second quarter, driven by a shift from on-premises infrastructure to cloud solutions and increasing demand for AI capabilities. Amazon.com Inc’s (NASDAQ:AMZN) advertising segment achieved year-over-year revenue growth of over $2 billion, indicating significant potential in video advertising and opportunities within Prime Video offerings.
As with other technology companies, fears of high capital spending are holding investors back. Amazon.com Inc (NASDAQ:AMZN) spending is expected to rise as its Project Kuiper broadband project and AI grow. Investors are still considering whether AI monetization and ROI will materialize anytime soon. Amazon.com Inc (NASDAQ:AMZN) is also facing a slowdown in consumer spending, especially on high-priced items like electronics and computers.
Based on Amazon.com Inc’s (NASDAQ:AMZN) third-quarter forecast, revenue growth would be 11%. The stock trades at 35 times Wall Street’s forecast earnings for fiscal 2025, showing that the stock is fairly valued and investors hoping for strong growth should look elsewhere.
Diamond Hill Select Strategy stated the following about Amazon.com, Inc. (NASDAQ:AMZN) in its second quarter 2024 investor letter:
“Our largest individual contributors in the second quarter included 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 from growing optimism about demand for AWS as Amazon customers’ investments in generative AI projects continue to rise.”
Overall, Amazon.com Inc (NASDAQ:AMZN) ranks first on Insider Monkey’s list of the titled The 10 latest AI news, earnings and analyst ratings you shouldn’t miss. While we recognize the potential of Amazon.com Inc (NASDAQ:AMZN), we believe AI stocks promise higher returns and do so in a shorter period of time. If you’re looking for an AI stock that’s more promising than AMZN but worth less than five times its earnings, read our report on the cheapest AI stock.
CONTINUE READING: Analyst sees a new $25 billion “opportunity” for NVIDIA And Jim Cramer recommends these stocks.
Disclosure: None. This article was originally published on Insider Monkey.
