We recently published a list of 7 U.S. stocks to buy and hold in 2024. In this article, we’ll take a look at how Amazon.com Inc. (NASDAQ:AMZN) stands compared to other best U.S. stocks to buy and hold. In 2024.
A neutral position amid uncertainty
The tech sector has performed well amid market concerns, with improved earnings expectations and heavy investment in artificial intelligence. Approximately 40% of operating cash flow is currently allocated to AI, raising questions about when these investments will start to pay off. High returns of more than 23% on average for micro-cap stocks, compared to averages of just over 8.5% for other sectors, suggest continued capital inflows to high-tech companies that demonstrate strong profitability. . While there may be some consolidation and slower growth, we are confident that investor sentiment will ultimately lead to a comeback for these stocks.
As sentiment toward major tech stocks shifts, other profitable tech companies also maintain strong momentum in the market. There was a conversation about this, and it was featured a few days ago in an article about the 10 most profitable Nasdaq stocks to invest in, where Jason Snipe, a principal at Odyssey Capital Advisors, talked about the recent giant In light of the stock rally, we discussed the momentum of the tech sector’s giant stocks. – Stock price downgrade and significant investor outflow. Below are excerpts from his thoughts.
“…this focus on AI has contributed to some of the recent downgrades, but also suggests continued upside potential for some companies within the sector.
…He acknowledged that while there may be some consolidation and slower growth, he believes investor muscle memory will eventually lead to a comeback for these stocks.
Snipe’s analysis highlights the complexities facing the technology sector amid market volatility and evolving economic conditions. While challenges remain, particularly with mega-cap stocks undergoing downgrades, there are also significant opportunities presented by innovation and high margins that could support continued growth in this sector…”
Katie Stockton, founder of Fairlead Strategies, appeared on CNBC’s “Closing Bell” on October 17 and emphasized that the market could move into volatile territory. Katie Stockton characterized the index as neutral, despite the strength of the trend and the fact that most stocks are trending higher. He noted that short-term momentum is currently strong, especially against the backdrop of major indexes, but there are concerns about potential problems if major companies like NVIDIA stall. He highlighted that sentiment appears to be overly bullish or greedy, as evidenced by the fear and greed index reaching extreme levels of 5%. This situation makes it difficult for the market to sustain an overbought situation, and this situation is prevalent across different time frames.
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Stockton expects the S&P 500 index to fall or enter a deeper correction in the fourth quarter, suggesting this could be the start of a range-bound environment. There is. He pointed to indicators such as the VIX that have entered a new high volatility cycle and cited signs of long-term depletion in the DeMark index, levels not seen overall since late 2021. However, this does not necessarily signal an impending bear market. , you are more likely to experience a more volatile trading environment.
Asked about the recent performance of banks and cyclical stocks compared to defensive stocks, Stockton said that while positive developments in the financial sector have contributed to the S&P 500’s recent gains, he does not believe this is a breakthrough for the economy. He acknowledged that it was too early to draw conclusions. Financially, it is relatively strong. He noted that most indicators suggest that financial markets are likely to perform in line with broader market trends rather than leading them. Additionally, he expressed concern that the mega-cap sector is losing its leadership position, which could pose challenges to overall market performance.
On small-cap stocks, Stockton said the Russell 2000 index tried to rally again, gaining 1.6% to close near 2,300, but the long-term trend still shows it underperforming compared to the S&P 500. pointed out. The Russell 2000 is still hovering below the resistance level established during the summer highs. Therefore, we do not believe there are any viable opportunities in small caps at this time and expect trading conditions for this segment to be neutral.
On bonds, Stockton said U.S. Treasury yields have shown some upward momentum, but have recently rebounded. He sees potential entry points in government bond proxies like TLT (iShares 20-Year Treasuries ETF) and signs of short-term downside exhaustion within a longer-term uptrend in bonds. suggests. He believes there is an opportunity for investors to get into proxy trading of government bonds now, but expects yields to stagnate unless there is a significant decline over time.
Her insights highlight her focus on maintaining balance amidst the uncertainty prevalent in both the stock and bond markets.
methodology
To find the best US stocks, we used Insider Monkey’s proprietary database to find the most popular US stocks among elite hedge funds. Stocks are ranked by the number of hedge funds that own the stock as of Q2 2024. The hedge fund data comes from Insider Monkey’s database, which tracks the movements of more than 900 elite money managers.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Amazon.com Inc. (AMZN): A leading choice for AI and cloud investments in 2024
A customer entering an internet retail store. Explain the convenience of online shopping.
Amazon.com Inc. (NASDAQ:AMZN)
Number of hedge fund holders: 308
Amazon.com Inc. (NASDAQ:AMZN) is a multinational technology company that has revolutionized electronic commerce, offering a wide range of products from books and electronics to food and clothing. Beyond retail, the company offers cloud computing services through AWS, streams content through Prime Video, and offers voice-enabled smart devices with Alexa.
In the second quarter of 2024, the company’s revenue increased 10.12% year over year, driven by a 19% increase in AWS and $14.7 billion in operating profit. The company now expects continued growth of 8-11% in Q3 2024. The company has put $30.5 billion into AI this year and plans to increase spending. This reflects the growing demand for generative and non-generative AI.
The company partnered with Databricks in a five-year agreement to create a data warehouse startup powered by Amazon.com Inc.’s (NASDAQ:AMZN) Trainium AI processor. This will enable businesses to leverage the benefits of Amazon.com Inc.’s (NASDAQ:AMZN) AI chips to develop AI models more efficiently and cost-effectively.
On October 16th, the company announced a new Kindle device equipped with a color display, “Kindle Colorsoft.” This is an important update, as the company has been criticized for its lack of color e-readers. Additionally, Kindle Scribe now has AI features for summarizing notes, and Kindle Paperwhite has been slimmed down while maintaining long battery life.
A diversified business model led by a strong cloud division and a growing advertising division positions the company for continued success. Record Prime sales further solidify its position as an e-commerce and technology powerhouse, making Amazon.com (NASDAQ:AMZN) a strong investment choice.
Meridian Hedged Equity Fund said the following about Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 Investor Letter:
Amazon.com, Inc. (NASDAQ:AMZN) is a global technology company with operations in e-commerce, cloud computing, digital advertising, and other businesses. We believe that our ownership of Amazon is well-positioned to benefit from several strong long-term trends, including the shift to online shopping, the growth of cloud computing, and the increasing importance of digital advertising. Because it is. The company beat expectations in the first quarter, with cloud computing revenue growth accelerating due to easing cost optimization pressures and an increase in generated AI workloads. North America’s retail division achieved record operating margins, highlighting the success of Amazon’s efforts to improve efficiency and reduce the cost of serving. International retail also showed promise as emerging markets steadily progress towards profitability. Given our strengths across these key segments, we continue to maintain our position within the company. ”
Overall, AMZN ranks #1 on our list of best US stocks to buy and hold in 2024. While we recognize AMZN’s potential as an investment, we believe AI stocks have great potential to deliver high returns and do so domestically. shorter period. If you’re looking for AI stocks that are more promising than AMZN but are trading at less than 5x P/E, check out our report on the cheapest AI stocks.
Read next: A $30 trillion opportunity: 15 humanoid robot stocks to buy as NVIDIA has ‘become a wasteland’, according to Morgan Stanley and Jim Cramer.
Disclosure: None. This article was originally published on Insider Monkey.
