We recently published a list of 10 Best Predictive Analytics Stocks to Invest in Now. In this article, we are going to take a look at where Amazon.com Inc (NASDAQ:AMZN) stands against other predictive analytics stocks to invest in now.
Data is at the forefront of many inventions today and is the primary ingredient of innovation. Of the many branches of data usage, predictive analytics is garnering immense traction, especially with the advent of artificial intelligence. Predictive analytics is the use of data, statistics, modeling, and machine learning to forecast, predict, and plan future events. There are different types of predictive analytics including regression analysis, time-series analysis, and machine learning algorithms.
According to a report by Fortune Business Insights, the global predictive analytics market was valued at $14.71 billion in 2023. The global predictive analytics market is expected to grow to $95.3 billion by 2032 from $18.02 billion in 2024 at a compound annual growth rate (CAGR) of 23.1%. The report attributes the growth in the industry to the growing investments in data by the government and large corporations followed by IoT and AI integrations. The use of predictive analytics is bifurcated into multiple segments including life sciences, automotive, retail, energy, telecom, and healthcare, to name a few.
Startups Disrupting the Predictive Analytics Space
There are a range of startups in the predictive analytics space that are revolutionizing the industry. One such name is Pecan AI. The automated predictive analytics platform is developed and designed intricately to meet the needs of data scientists. Data scientists can use the platform to build powerful predictive AI capabilities and machine learning models that drive business impact. Data scientists do not need coding or data science skills to make use of the platform. The platform is used by a range of companies including Johnson & Johnson, SciPlay, Hydrant, Kenvue, Proper Cloth, and DME Acquire. Earlier in January, the company introduced predictive generative AI to transform enterprises. Pecan AI also has partnerships with some of the largest tech corporations and platforms including Azure and AWS.
DataRobot is another leader in the predictive analytics industry that delivers revolutionary AI use cases for businesses. Its AI platform consists of core AI features such as generative AI, predictive AI, AI governance, AI observability, and AI foundation. The platform promises 83% faster deployment and secures nearly 1.4 billion predictions every day. Users can run models in minutes by skipping manual data preparation and cleaning. Additionally, the platform eliminates the need for repetitive coding, by streamlining feature discovery and defining elements of datasets automatically. Users can connect data from warehouses such as AWS and Azure into a singular workspace. Some of the predictive use cases facilitated by DataRobot include time series modeling, clustering and seasonality, cold start forecasting, nowcasting, and anomaly detection.
Our Methodology
To come up with the 10 best predictive analytics stocks to invest in now we went through multiple reports on the internet, ETFs, and stock screeners. We then examined the analyst upside of each stock and ranked the ones with the highest percentage. Our list is in ascending order of the analyst upside as of November 11, 2024.
Why are we interested in the stocks that hedge funds pile into? 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).
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Amazon.com Inc (NASDAQ:AMZN)
Analyst upside as of November 11, 2024: 14%
Amazon.com, Inc. (NASDAQ:AMZN) is one of the best predictive analytics stocks to invest in. The technology company is an e-commerce giant that also provides streaming and data cloud services.
Amazon Web Services, its proprietary cloud platform, is a leader in predictive analytics. Users can leverage predictive analytics solutions on AWS to garner insights into consumer behavior and use them to predict future decisions and customer patterns. At AWS, users enjoy free and real-time access to data no matter where it is stored or originally placed. In addition to that, businesses can also make data-driven decisions by making the data available to the right people at the right time.
For predictive analytics use cases, Amazon.com, Inc. (NASDAQ:AMZN) leverages machine learning to offer deep insights into data on AWS Analytics. In addition to that, AWS offers built-in machine learning integration to facilitate the creation, training, and deployment of ML models.
Overall, in the third quarter of 2024, AWS grew its sales by 19% year-over-year to $27.5 billion. The growing use of AI and advanced data capabilities have been fueling AWS’s position, which explains its revenue growth. Analysts are also bullish on the stock and their median price target of $235 represents an upside of 14% from current levels.
Alphyn Capital Management stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2024 investor letter:
“Amazon.com, Inc.’s (NASDAQ:AMZN) continued growth is driven by its strong performance in AWS and advertising, which grew 19% and 20%, respectively. E-commerce growth moderated to 9.3%, likely due to softer consumer demand.
In previous letters, I mentioned how Amazon’s heavy investments in logistics and fulfillment suppressed margins for some time, but the company is now reaping the rewards of those earlier expenditures. European operations have been profitable for the second consecutive quarter, while North American operating margins have risen from pandemic lows to 5.3%. A key ongoing area of focus for Amazon has been reducing the “cost to serve”; this is beginning to show tangible benefits. In 2023, Amazon undertook a “regionalization” strategy, which divided the U.S. into eight distinct regions for fulfillment and transportation, with corresponding distribution centers in each. As I learned from an expert interview done by InPractise, “regionalization” has resulted in estimated shipping expenses dropping from $4.76 per unit to $4.50, and they are now approximately $4.26, with potential reductions of 2-3% annually. Interestingly, Amazon leaned on its third-party vendors (3P) to finance much of this strategy. It did so by requiring 3P vendors ship inventory to the multiple regional distribution centers, instead of to a single location as they used to do. Moreover, Amazon imposed penalties for failing to meet strict minimum and maximum quantities. In this way, Amazon used 3P inventory to expand its distribution capacity by around 24 million square feet, much of which it could use for its own 1P inventory. Clever strategy, but one wonders if this raises the risk of an eventual vendor backlash due to the added financial and logistical pressures on 3P sellers.
Like Alphabet, Amazon is investing heavily in its AWS infrastructure to support its growing AI business. In the first half of the year, the company spent $30.5 billion on capital expenditures, with plans to exceed that in the year’s second half. When questioned about this during the earnings call, CEO Andy Jassy emphasized that they are seeing significant demand for AI-related services, which he believes will become a “very large” business for Amazon.”
Overall, AMZN ranks 6th on our list of best predictive analytics stocks to invest in now. While we acknowledge the potential of AMZN to grow, our conviction lies in the belief that certain 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.