We recently compiled a list of the 10 Important Stocks that Jim Cramer is Talking About. In this article, we are going to take a look at where Amazon.com Inc (NASDAQ:AMZN) stands against the other important stocks that Jim Cramer is talking about.
Jim Cramer in a latest program talked about the latest market volatility and said using too many AI algorithms, data points and correlations could be useful for short-term traders but for investors, these tools could blur your long-term vision.
“I think as investors we’re putting on mental shackles if we behave like this. Remember back in my hedge fund, our whole goal was day trading, was to scalp pennies from the flow. That’s a lot of risk for not much reward. It’s better to zero in on dollars for the big picture. That’s what I want you to do.”
Jim Cramer said that the market is currently oversold and this happened twice before in 2024. These moments, according to Cramer, proved to be some of the best entry points to pile into stocks in hindsight.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
For this article we watched Jim Cramer’s recent programs and listed some of the stocks he commented on. For these stocks, we also mentioned the number of hedge fund investors. 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).
Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 286
Jim Cramer in a latest program talked about the likely departure of FTC Commissioner Lina Khan and its impact on Amazon.com Inc (NASDAQ:AMZN) shares.
“Khan, who, as I mentioned, was relentless in her attempts to smash Amazon—boy, did she hate Amazon—believes it’s too powerful. As she put it, “Amazon’s actions allow to stop Rivals and sellers from lowering prices, degrade quality for Shoppers, overcharge sellers, stifle Innovation, and prevent Rivals from Fairly competing against Amazon.com Inc (NASDAQ:AMZN).” But what’s missing? How about the fact that Amazon Prime is the greatest bargain in the world and has managed to lower prices for 200 million users? If you’re a merchant and don’t like their platform, just go to Shopify, for heaven’s sake. It’s not like Amazon is sending the mafia to put its rivals out of business—it’s just great at what it does. How could the FTC be so out of step with America? How could it be so ideological and so disrespectful of Amazon.com Inc (NASDAQ:AMZN) or even the reputation of its own organization?”
Amazon.com Inc (NASDAQ:AMZN) threw it out of the park with its latest quarterly results amid strong Cloud growth. Amazon Web Services has generated $27.5 billion in revenue, marking a 19% year-over-year increase. The segment’s operating income is expanding at nearly 2.5 times the rate of its revenue growth, boosting Amazon.com Inc (NASDAQ:AMZN)’s overall operating income. At this pace, AWS is on track to deliver $110 billion in annualized revenue. If it maintains its ~20% growth rate, AWS could reach $125-130 billion in revenue in FY 2025.
For the ongoing quarter, Amazon.com Inc (NASDAQ:AMZN) expects revenue between $181.5 billion and $188.5 billion, implying growth of up to 11%. Amazon.com Inc (NASDAQ:AMZN)’s stock currently trades at a forward P/E of 32.9, higher than the big tech average of 25.5. If Amazon.com Inc (NASDAQ:AMZN) grows its earnings per share (EPS) by an average of 25% annually over the next three years, it could achieve an EPS of around $9.25 by FY 2027 (up from an estimated $4.74 in FY 2024). Applying a 35x P/E ratio in line with Amazon.com Inc’s (NASDAQ:AMZN) historical average suggests a fair stock value of over $300. The primary catalyst for this target would be AWS’s robust operating income growth.
Meridian Hedged Equity Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a leading e-commerce company that operates a vast online marketplace for third-party sellers, sells its own products, and provides cloud infrastructure services through Amazon Web Services (AWS). We own Amazon because we believe AWS and advertising will continue to drive long-term revenue growth and profitability improvements. Although the stock didn’t perform well this quarter, we attribute this to a mix of short-term factors, including macroeconomic headwinds impacting consumer and enterprise spending, slowing retail revenue growth, and retail margin expansion falling short of market expectations. Additionally, increased investment in longer-term initiatives like satellite broadband and other experimental projects put further pressure on margins. Despite weaker-than-expected third-quarter guidance, we believe Amazon’s long-term growth story remains strong. We see multiple levers for improved profitability and free cash flow generation over time. We maintained our position in the company during the period.”
Overall, AMZN ranks 1st on our list of the important stocks that Jim Cramer is talking about. While we acknowledge the potential of AMZN, our conviction lies in the belief that under the radar 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.