If you can buy just one “magnificent 7” share in the next decade, this is it (hint: it’s not nvidia)
I’m using it on November 30, 2022 as the informal beginning of the Artificial Intelligence (AI) revolution. This is the day Openai released ChatGpt to the general public.
ChatGpt has become part of mainstream culture, S&P 500(snpindex: ^gspc)and Nasdaq Composite(Nasdaqindex: ^ixix) Index It won multiple highs – primarily thanks to Magacup Technology’s stocks witnessed a parabolic rise. Among the biggest winners in the capital market.”The magnificent Seven“KK.
Within that cohort, nvidia and Meta Platform At the time of writing, he was a top performer with 601% and 409% respectively (March 17th).
The third place is e-commerce and cloud computing leaders. Amazon(NASDAQ: AMZN)since the release of ChatGPT, its stock has lost 102%. This return is multiples higher than the profits seen on the S&P 500 and Nasdaq, but I think there will be a better day for Amazon in the future.
Explore how Amazon is making waves in its AI arena and analyze how the company’s investment in technology is already fruitful. Additionally, we’ll check out Amazon’s ratings and argue why I think this is the best time to prepare to clench your fist and hold it for the long term.
Companies such as Nvidia Microsoftand Tesla With much attention surrounding the AI story, Amazon has quietly made its own big moves.
First of all, the company invested a whopping $8 billion in close-knit companions of Openai, known as Humanity. As part of their alliance, humanity is training the generated AI models on Amazon’s cloud infrastructure. Additionally, AI developers are leveraging Amazon’s custom training and estimated chips. This seems to prove that Nvidia and its Graphic Processing Unit (GPU) giants are competitive.
The company has witnessed it since Amazon partnered with humanity in September 2023 Significant acceleration of cloud business -Amazon Web Services (AWS). To add the colours here, AWS revenues increased 13% per year in the fourth quarter of 2023, while operating profit increased 39% year-on-year.
However, as of the fourth quarter of 2024, AWS increased 19% year-on-year, expanding operating income growth to 48%.
All this is encouraging, but Amazon doesn’t seem to depend on its glory. Amazon plans to spend more than $30 billion on data centers in Georgia, Ohio, Mississippi and Mexico over the next few years, according to press releases from various companies.
For me, there is an interesting cycle here in that AMAZON’s AI integration via AI has led to consistent cash flow growth.
Finally, outside of chip technology, cloud infrastructure and data centers, Amazon has invested heavily in AI robotics, particularly robotics implemented in company warehouses. I think this is a familiar choice by Amazon. Because the company is able to unlock key efficiencies in its e-commerce business and complement the expansion margins already seen in the crowd segment.
Image source: Getty Images.
Nvidia is a beloved person of the AI revolution to date and I think the company’s future is bright, but I have doubts about whether Nvidia shares will be able to rise by hundreds of percentage points over the next decade. At some point, Nvidia’s growth could show signs of slowing down, especially as competing chips begin to plunge into the scene.
In contrast, I think Amazon’s AI growth stage is still in its early innings. The company has several different projects at hand, and management appears to be eager to focus on the lucrative combination of accelerating revenue and improving the key parts of the business: e-commerce and AWS profit margins.
Nonetheless, Amazon is trading with a forward revenue estimate of just 31x. As the chart below shows, Amazon’s current forward P/E multiples are significantly discounted compared to the company’s five-year average, hovering at the lowest level for over a year.
As AI becomes more fixtures across the Amazon Ecosystem, we consider the current valuation trends to be a tremendous opportunity for buying given the current pace of growth and potential profits. Investors looking for a healthy combination of growth and consistent profitability may want to consider buying Amazon stocks now and preparing to hold them firmly.
Consider this before purchasing stock on Amazon.
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development, Facebook spokeswoman and sister to Metaplatform CEO Mark Zuckerberg, is a member of Motley Fool’s board of directors. Adam Spatacco They have positions at Amazon, Meta Platforms, Microsoft, Nvidia and Tesla. Motley Fool has and recommends Amazon, Meta Platforms, Microsoft, Nvidia and Tesla positions. Motley Fool recommends the following options: A $395 phone at Microsoft for January 2026 length and a $405 phone to Microsoft for January 2026 short term. To Motley’s fool Disclosure Policy.
