We recently published a list of 17 Latest AI News and Analyst Ratings You Shouldn’t Miss. In this article, we take a look at the position of Amazon.com, Inc. (NASDAQ:AMZN) compared to other AI stocks that are currently in the sights of hedge funds.
It’s no surprise that companies in the US and China are leading the world in artificial intelligence. Conservative estimates of the impact of AI on the global economy by market experts at consulting firm PwC show that AI-related profits of almost $11 trillion will account for almost 70% of the total global economic impact by 2030. In China, AI is expected to contribute to a nearly 26% increase in GDP within the next six years, while in the US this figure is likely to be 15%. AI undoubtedly represents the largest commercial investment opportunity in this fast-moving global economy.
Smart companies are seizing this opportunity. According to market research firm IDC, investment in AI infrastructure will exceed $30 billion this year and is expected to grow to $47 billion by 2028. This represents about 30% of total global spending on AI. One of the most prominent use cases for AI is customer service, where global companies have spent more than $16 billion in 2024 so far. The impact of these investments in AI will be significant in the future. AI is expected to contribute to a $15 trillion increase in the global economy by 2030, 14% more than it currently spends.
Like other sectors of the economy, Wall Street is familiar with AI. ChatGPT’s debut in November 2022 marked the beginning of the AI revolution in finance. Since then, revenues from software, hardware and services for AI systems have grown rapidly and will surpass $400 billion in 2027, according to the International Monetary Fund (IMF). Financial sector spending is likely to double to nearly $100 billion by 2027, with an average annual growth rate of nearly 30% – the fastest of the Big Five industries. Hedge funds, often the pioneers of cutting-edge technology, are also embracing generative AI.
Our methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular with hedge funds. 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 (read more details here).
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Amazon.com, Inc. (NASDAQ:Amazon)
Number of hedge fund owners: 308
Amazon.com, Inc. (NASDAQ:AMZN) is a technology conglomerate with core interests in the e-commerce business. As it prepares to integrate AI into Amazon Web Services (AWS), one of the largest cloud computing providers in the world, the technology company continues to invest in other AI companies, most notably its $4 billion investment in California-based startup Anthropic earlier this year. The latter is a rival of OpenAI, known for ChatGPT. Under the terms of the agreement, the startup will use AWS as its primary cloud provider as it uses Amazon chips to build, train and deploy generative AI models. Authorities in the United Kingdom are reviewing this deal to determine whether it violates competition rules.
Amazon.com, Inc. (NASDAQ:AMZN) has been a Wall Street darling for many years, and the past few weeks are no exception. Citigroup recently reiterated a buy rating on the stock with a $245 price target, noting that the company delivered a strong second quarter as AWS revenue growth accelerated, faster delivery times improved conversion rates, and overall delivery costs declined. The recommendation added that as the company integrates AI across all services, it is on track to deliver further growth and margin expansion, so its third-quarter operating income guidance may prove conservative.
Total AMZN 3rd place on our list of the best AI stocks to buy. While we recognize AMZN’s potential as an investment, we believe some AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than AMZN but trades at less than 5x earnings, read our report on the cheapest AI stock.
READ MORE: Michael Burry is selling these shares And Jim Cramer recommends these stocks.
Disclosure: None. This article was originally published on Insider Monkey.
