When talking about artificial intelligence and the companies that are achieving remarkable results with it, no other companies can compete with the “Magnificent Seven” as all seven are helping shape the AI narrative in their own ways. But one prominent player of the seven is Amazon (NASDAQ: AMZN), which is viewed as one of the best AI developers among the mega-cap tech companies. Additionally, AMZN stock has long-term growth prospects that look as good as ever.
That’s why billionaire hedge fund manager, Ken Griffin, is making huge bets on AMZN stock, but he’s not the only one who’s bullish. Here are some analysts and investment advisory firms who recently went all-in on AMZN stock thanks to the company’s positive outlook on its stock performance and promising estimates for the upcoming earnings report on April 30th.
Ithaka Group
The investment advisory firm Ithaka Group recently released their “Ithaka U.S. Growth Strategy” Q1 2024 investor letter. It featured multiple stocks including AMZN stock, and explicitly stated that the company would be able to contain expenses and push operating margins above prior peaks in the near-to-medium term. It also mentioned that Amazon Web Services, or AWS, has become the market leader in outsourced cloud infrastructure which approves of Amazon’s initial efforts to enhance their position in the AI market.
It also spoke about Amazon’s growing advertising business as a great catalyst for AMZN stock, saying that Amazon Advertising is garnering a significant share in digital advertising, particularly product placement ads, thanks to consumers beginning their product searches on Amazon’s site. They’re very right to be bullish on Amazon’s advertising business, as it made the company $14.6 billion in the last quarter, an increase of 27% year-over-year.
Ken Griffin’s Massive AMZN Stock Buys
Billionaire Ken Griffin’s hedge fund Citadel, which holds shares of all of the top technology stocks, recently acquired a stake in AMZN stock. There’s a reason why some investors choose to pay close attention to the stocks Griffin is buying, and that’s because he has made many winning bets over time, and investors have figured that they could also benefit from some of his moves.
For instance, Citadel has generated about $74 billion in total gains since its inception in 1990, and for last year alone, Citadel managed to bring in more than $8 billion, which prompted LCH Investments to name the hedge fund among last year’s top performers. This brings us to Griffin’s most recent move; which was more than doubling his holdings of two Magnificent Seven stocks, with one of them being Amazon.
Citadel lifted its position in AMZN stock by 227% in the fourth quarter, buying more than 4 million shares which makes Amazon its fourth-biggest position, so it’s safe to say this is one of Citadel’s favorites. In fact, Amazon has been a big winner for Griffin and Citadel, as its shares jumped by more than 200% during the first period when it was in the hedge fund’s portfolio. Now, the stock is up by more than 300% since the end of 2017’s first quarter.
Griffin must’ve had AI on his mind when he bought more Amazon shares in Q4, and in particular, the generative AI boom, and how it could provide a huge long-term tailwind for AWS. Bloomberg forecasts that generative AI will be a $1.3 trillion market by 2032, and this could be a great opportunity for Amazon as the AWS launched its Amazon Bedrock service last year to help organizations rapidly build generative AI apps in the cloud. They also have their powerful AI assistant, CodeWhisperer, a tool that generates code suggestions to range from snippets to full functions.
This will be a game changer for developers looking to accelerate their productivity and bring projects to market faster. In addition to that, Amazon Q is another powerful generative AI assistant to rival software like Microsoft’s (NASDAQ: MSFT) co-pilot. Additionally, Amazon is one of Nvidia’s (NASDAQ: NVDA) major customers, and uses its GPUs extensively, even though it has also built its own AI chips, which shows how much the company believes that AI is what will drive its growth going forward, and how important it is for the company to have the newest tech available.
Bank of America
Moreover, Bank of America Securities analyst, Justin Post, is also extremely bullish on Amazon. He reiterated a “Buy” rating on the stock with a price target of $204, which is an upside of approximately 13.57% from where the stock is currently trading. He also expects Amazon’s first quarter earnings to reflect positive trends with a revenue forecast of $143 billion, closely aligning with market expectations which amount to $142.5 billion. And he added that the focus will be on potential upside from AWS and advertising.
Amazon’s AI Prospects
Right now, Amazon could benefit from AI in two ways and both might supercharge earnings over the long term. First of all, Amazon is using AI to become more efficient and lower its costs. For example, in e-commerce, AI helps determine the fastest delivery routes for package delivery which reduces travel time and costs. On top of that, It is also using AI to help customers find the right items, and see the right ads that are suitable to them, and this contributes to the customers being more likely to return to the platform for their shopping.
Secondly, Amazon’s cloud computing business, which sells AI chips and related products and services to customers, increases the chance of Amazon winning big. AWS has access to an enormous client base, and it’s actually the biggest cloud company in the world. AWS is going all in on AI, offering not only chips but also a fully managed service that gives customers access to popular large language models that they can customize for their own purposes. This means that AWS may serve a broad range of AI customers and as the demand for AI applications rises, AWS will play a crucial role in Amazon’s longer-term growth.
With that being said, Amazon is not planning to depend on AI only, as it also keeps investing a lot of money to enhance its e-commerce business. Amazon recently launched a new grocery delivery subscription, which will be available in over 3,500 cities and towns across the country. The company’s move comes as part of the efforts to expand its fresh-food business and to further improve its e-commerce business. All of these efforts on both aspects, the AI and the e-commerce business, will definitely improve Amazon’s performance, increase customer satisfaction, and help the business grow.
AMZN Stock Forecast
With the company’s earnings report on April 30th, investors will be eagerly watching for Amazon’s performance. Analysts expect that Amazon will post earnings per share of $0.82, which would mark year-over-year growth of 164.52%. Simultaneously, the latest consensus estimate expects the revenue to be $142.5 billion, showing a 11.91% escalation compared to the year-ago quarter.
As for the full fiscal year, analysts forecast earnings per share of $4.10 and revenue of $641.49 billion, indicating increases of over 41.38% and over 11.61%, respectively, compared to the previous year. Therefore, all of this is more reasons to be bullish on AMZN stock, and the company’s performance over both the short-term and long-term.
The majority of Wall Street analysts are optimistic about AMZN stock. In the last 90 days, 61 analysts covered the stock, with the majority of the analysts, 45 to be exact, giving a strong buy rating on the stock, while 14 analysts gave a buy rating. Amazon will continue to hold the dominant market share in the cloud infrastructure market, and since demand for cloud services will continue to skyrocket with AI being the primary driver, AMZN stock seems like a great investment opportunity, as AWS is extremely well positioned to meet these needs.
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