Last month, the best mutual funds bet big on Nvidia, scooping up more than $1.6 billion worth of the stock. But this month, Amazon.com snatched the crown as the AI Wall Street darling. Top money managers gorged on shares of Amazon stock to the tune of $16.2 billion — 10 times as much as they invested in Nvidia in October.
Amazon also earned a spot on the IBD Breakout Stocks Index, joined by fellow Magnificent Seven stocks Microsoft and Apple.
The artificial intelligence boom has boosted all of these tech giants, as well as Nvidia stock, Alphabet, Tesla and Meta Platforms.
Through Alexa and more, Amazon has long been a powerhouse in machine learning, large language models (LLM) and other AI technologies. Amazon is now betting on its own AI model, code-named Olympus, as reported by Barron's.
The Amazon Web Services parent is also expanding the use of generative AI throughout its AWS cloud services business to boost productivity and innovate faster.
See Who Joins AMZN, MSFT And AAPL On The IBD Breakout Stocks Index
Amazon Unveils New Partnerships With Meta And Snap
The two Magnificent Seven titans have teamed up to launch a new initiative. The Meta-Amazon partnership centers around a new feature that will allow users to link their Facebook and Instagram accounts — two properties owned by Meta Platforms — to their Amazon accounts.
The collaboration will enable Facebook and Instagram users to make purchase by clicking on promotions in their feeds.
Amazon has also teamed up with Snapchat parent Snap. Similar to the Amazon-Meta tie-up, the Amazon-Snap partnership will allow Snap users to buy Amazon products advertised on Snapchat directly through the app.
Amazon Smiles With 236% Growth, Strong Forecasts
On Oct. 26, Amazon posted second-quarter earnings of 94 cents a share, a year-over-year gain of 236%. Sales growth accelerated for a second straight quarter, rising 13% to $143.1 billion.
The continued rebound in the online retail and cloud giant's fundamentals have lifted its Composite Rating to 86, showing it is outpacing 86% of all stocks in terms of fundamental and technical performance.
Wall Street expects that turnaround to continue. Albeit based on comparisons to prior periods that showed a loss, analysts see Amazon delivering 2,964% EPS growth for Q3, leading to a whopping 4,594% earnings increase for the full year. Estimates for 2024 call for 39% earnings growth.
With an 86 Composite Rating, Amazon lags the other Magnificent Seven stocks, coming in just behind an 88 rating for Apple stock and an 89 for Tesla. Nvidia, Microsoft and Meta all earn the highest-possible 99 Composite, while Google stock sports a strong 97.
Amazon Stock Sets Up Yet Another Breakout
At the end of October, Amazon stock cleared a 134.48 buy point in a double bottom. From there, the AI cloud leader has made an impressive climb.
On Tuesday, Amazon gapped up to poke its head above a 145.86 alternative buy point. Showing clear market leadership, the relative strength line has risen to a 52-week high. On Wednesday, however, Amazon retreated below that entry, slipping nearly 2%.
As the stock market indexes sign on to a Santa Claus rally, Amazon's fellow Magnificent Seven stocks also ride that wave. Microsoft, Meta, Nvidia and Apple stock are all showing unmistakable power although, like Amazon, they're taking a breather today. Google stock and Tesla both rose, with each closing above their 10-week moving averages.
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Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
