Amazon Web Services ended 2025 with its strongest quarterly growth rate in more than three years.
The company reported Thursday that its cloud service business recorded $35.6 billion in revenue in the fourth quarter of 2025. This figure marks a 24% year-on-year increase and the business segment’s largest growth rate in 13 quarters. Annual revenue run rate for the business segment is $142 billion, according to Amazon. The cloud service also saw an increase in its operating income from $12.5 billion in the fourth quarter compared to $10.6 billion in the same period in 2024.
“It’s very different having 24% year-over-year growth on $142 billion annualized run rate than to have a higher percentage growth on a meaningfully smaller base, which is the case with our competitors,” Amazon CEO Andy Jassy said during the company’s fourth-quarter earnings call. “We continue to add more incremental revenue and capacity than others, and extend our leadership position.”
That fourth-quarter growth was fueled by new agreements with Salesforce, BlackRock, Perplexity, and the U.S. Air Force, among other companies and government entities.
“More of the top 500 U.S. startups use AWS as their primary cloud provider than the next two providers combined,” Jassy said. “We’re adding significant easy to core computing capacity each day.”
AWS also added more than a gigawatt of power to its data center network in the fourth quarter.
Jassy said AWS still sees a fair amount of its business coming from enterprises that want to move infrastructure from on-premise to the cloud. AWS is, of course, also seeing a boost from the AI boom, and Jassy credited AWS’s top-to-bottom AI stack functionality.
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“We consistently see customers wanting to run their AI workloads where the rest of their applications and data are,” Jassy said. “We’re also seeing that as customers run large AI workloads on AWS, they’re adding to their core AWS footprint as well.”
AWS made up 16.6% of Amazon’s overall $213.4 billion revenue in the fourth quarter.
AWS’s success wasn’t enough to appease Amazon investors, however. Amazon shares fell 10% in after-hours trading after investors reacted to the company’s plan to boost capital expenditures and missed Wall Street’s expectations on earnings per share.
Amazon is in discussions with OpenAI to invest $10 billion in the company while supplying more of its AI chips and cloud computing services, according to The Financial Times. The deal would push OpenAI’s valuation over $500 billion but is likely to raise more questions about the company’s circular investment agreements involving chips and data centers.
The two companies are also in talks about the possibility of OpenAI helping Amazon with its online marketplace, similar to deals it has made with Etsy, Shopify and Instacart. However, any agreement still wouldn’t allow Amazon to market OpenAI’s most advanced models on its developer cloud platform, as Microsoft holds the exclusive rights to those until the 2030s.
OpenAI recently restructured its agreement with Microsoft to allow it to use data center capacity from other suppliers. Around the same time, it made a string of deals with NVIDIA, Oracle, AMD and others to build out data center capacity and acquire or rent AI chips.
The new deal would require OpenAI to use Amazon’s Trainium AI chips and rent more data center capacity from Amazon Web Services (AWS). That’s on top of the $38 billion that OpenAI has already committed to renting servers from AWS over the next seven years.
These deals have sounded alarms among investors considering their circular nature. In many of those, including this latest Amazon deal, OpenAI is taking investment money and then sending that cash back to the same company for infrastructure or chips. And the amounts are staggering, with just two companies, Softbank and Oracle, spending a combined $400 billion on new data centers for OpenAI’s compute needs. And so far, OpenAI has lost more money than it makes.
OpenAI and Amazon have signed a $38 billion deal that enables the ChatGPT maker to run its artificial intelligence systems on Amazon’s data centers in the U.S.
OpenAI will be able to power its AI tools using “hundreds of thousands” of Nvidia’s specialized AI chips through Amazon Web Services as part of the deal announced Monday.
Amazon shares increased 4% after the announcement.
The agreement comes less than a week after OpenAI altered its partnership with its longtime backer Microsoft, which until early this year was the startup’s exclusive cloud computing provider.
California and Delaware regulators also last week allowed San Francisco-based OpenAI, which was founded as a nonprofit, to move forward on its plan to form a new business structure to more easily raise capital and make a profit.
“The rapid advancement of AI technology has created unprecedented demand for computing power,” Amazon said in a statement Monday. It said OpenAI “will immediately start utilizing AWS compute as part of this partnership, with all capacity targeted to be deployed before the end of 2026, and the ability to expand further into 2027 and beyond.”
AI requires huge amounts of energy and computing power and OpenAI has long signaled that it needs more capacity, both to develop new AI systems and keep existing products like ChatGPT answering the questions of its hundreds of millions of users. It’s recently made more than $1 trillion worth of financial obligations in spending for AI infrastructure, including data center projects with Oracle and SoftBank and semiconductor supply deals with chipmakers Nvidia, AMD and Broadcom.
Some of the deals have raised investor concerns about their “circular” nature, since OpenAI doesn’t make a profit and can’t yet afford to pay for the infrastructure that its cloud backers are providing on the expectations of future returns on their investments. OpenAI CEO Sam Altman last week dismissed doubters he says have aired “breathless concern” about the deals.
“Revenue is growing steeply. We are taking a forward bet that it’s going to continue to grow,” Altman said on a podcast where he appeared with Microsoft CEO Satya Nadella.
Amazon is already the primary cloud provider to AI startup Anthropic, an OpenAI rival that makes the Claude chatbot.
The outage, which began at Amazon’s Northern Virginia centers, caused widespread disruptions. An assistant professor of computer science at Virginia Tech said it reminded us of how dependent we are on a few tech giants.
A major cloud outage Monday disrupted services across the globe, offering a reminder of how dependent we are on just a few tech giants.
“Amazon Web Services is one of the foundations of the modern internet,” said Shaddi Hasan, assistant professor of computer science at Virginia Tech. “When Amazon breaks, that takes down so many of the services that we use every day.”
Hasan said running a cloud infrastructure is expensive and complex, which is why only a few companies lead the pack.
“There’s only a handful of these companies that run infrastructure at that scale — Amazon, Microsoft, Google and a few others,” he said.
The outage, which began early Monday in Amazon’s Northern Virginia centers, caused widespread disruptions. Services affected ranged from social media platforms to banking apps.
Hasan said “the cloud” is essentially a network of massive data centers or warehouses filled with computers that run the services the public relies on every day. Many of these are located in Northern Virginia, one of the world’s largest data center hubs.
When it comes to cloud computing, there are only a few big players, Hasan said. “Unless you’re in the space, they can kind of be unseen giants to a lot of people. So much of our infrastructure depends on them.”
He said businesses are faced with a tough choice that involves deciding to rely on a major cloud provider and risk being affected by outages, or build and maintain their own infrastructure. The latter is an option that’s often too costly and complex.
Hasan also pointed out that the internet wasn’t always this centralized.
He teaches his students about the early days of the U.S. Advanced Research Projects Agency Network, more popularly known as ARPANET. It was the internet’s predecessor from the 1960s, and was designed to be resilient and even able to work around a nuclear attack.
“But as time has gone on … centralization of the services that run on top of that infrastructure has kind of undermined some of that original ethos and spirit,” he said.
And while outages like this may lead to improvements, Hasan doesn’t expect a major shift.
“It’s hard to imagine a world where … they move away from that model,” he said.
He said incidents like this highlight just how delicate the system has become: “It reminds us of the fragility of relying on just a few large providers.”
And when things go wrong, fixing them isn’t easy.
“These failures are rare, and when they happen, they’re quite complex to remediate,” Hasan said.
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An Amazon Web Services outage is causing major disruptions around the world. The service provides remote computing services to many governments, universities and companies, including The Associated Press.On DownDetector, a website that tracks online outages, users reported issues with Snapchat, Roblox, Fortnite, online broker Robinhood, the McDonald’s app and many other services.Coinbase and Signal both said on X that they were experiencing issues related to the AWS outage.The first signs of trouble emerged at around 3:11 a.m. Eastern Time, when Amazon Web Services reported on its Health Dashboard that it is “investigating increased error rates and latencies for multiple AWS services in the US-EAST-1 Region.”Later the company reported that there were “significant error rates” and that engineers were “actively working” on the problem.About two hours later, AWS said in an update that it applied “initial mitigations,” and it quickly followed up to say, “We are seeing significant signs of recovery. Most requests should now be succeeding. We continue to work through a backlog of queued requests.”AWS customers include some of the world’s biggest businesses and organizations.“So much of the world now relies on these three or four big (cloud) compute companies who provide the underlying infrastructure that when there’s an issue like this, it can be really impactful across a broad range, a broad spectrum” of online services, said Patrick Burgess, a cybersecurity expert at U.K.-based BCS, The Chartered Institute for IT.
An Amazon Web Services outage is causing major disruptions around the world. The service provides remote computing services to many governments, universities and companies, including The Associated Press.
On DownDetector, a website that tracks online outages, users reported issues with Snapchat, Roblox, Fortnite, online broker Robinhood, the McDonald’s app and many other services.
Coinbase and Signal both said on X that they were experiencing issues related to the AWS outage.
The first signs of trouble emerged at around 3:11 a.m. Eastern Time, when Amazon Web Services reported on its Health Dashboard that it is “investigating increased error rates and latencies for multiple AWS services in the US-EAST-1 Region.”
Later the company reported that there were “significant error rates” and that engineers were “actively working” on the problem.
About two hours later, AWS said in an update that it applied “initial mitigations,” and it quickly followed up to say, “We are seeing significant signs of recovery. Most requests should now be succeeding. We continue to work through a backlog of queued requests.”
AWS customers include some of the world’s biggest businesses and organizations.
“So much of the world now relies on these three or four big (cloud) compute companies who provide the underlying infrastructure that when there’s an issue like this, it can be really impactful across a broad range, a broad spectrum” of online services, said Patrick Burgess, a cybersecurity expert at U.K.-based BCS, The Chartered Institute for IT.
An Amazon Web Services outage is causing major disruptions around the world. The service provides remote computing services to many governments, universities and companies, including The Associated Press.On DownDetector, a website that tracks online outages, users reported issues with Snapchat, Roblox, Fortnite, online broker Robinhood, the McDonald’s app and many other services.Coinbase and Signal both said on X that they were experiencing issues related to the AWS outage.The first signs of trouble emerged at around 3:11 a.m. Eastern Time, when Amazon Web Services reported on its Health Dashboard that it is “investigating increased error rates and latencies for multiple AWS services in the US-EAST-1 Region.”Later the company reported that there were “significant error rates” and that engineers were “actively working” on the problem.About two hours later, AWS said in an update that it applied “initial mitigations,” and it quickly followed up to say, “We are seeing significant signs of recovery. Most requests should now be succeeding. We continue to work through a backlog of queued requests.”AWS customers include some of the world’s biggest businesses and organizations.“So much of the world now relies on these three or four big (cloud) compute companies who provide the underlying infrastructure that when there’s an issue like this, it can be really impactful across a broad range, a broad spectrum” of online services, said Patrick Burgess, a cybersecurity expert at U.K.-based BCS, The Chartered Institute for IT.
An Amazon Web Services outage is causing major disruptions around the world. The service provides remote computing services to many governments, universities and companies, including The Associated Press.
On DownDetector, a website that tracks online outages, users reported issues with Snapchat, Roblox, Fortnite, online broker Robinhood, the McDonald’s app and many other services.
Coinbase and Signal both said on X that they were experiencing issues related to the AWS outage.
The first signs of trouble emerged at around 3:11 a.m. Eastern Time, when Amazon Web Services reported on its Health Dashboard that it is “investigating increased error rates and latencies for multiple AWS services in the US-EAST-1 Region.”
Later the company reported that there were “significant error rates” and that engineers were “actively working” on the problem.
About two hours later, AWS said in an update that it applied “initial mitigations,” and it quickly followed up to say, “We are seeing significant signs of recovery. Most requests should now be succeeding. We continue to work through a backlog of queued requests.”
AWS customers include some of the world’s biggest businesses and organizations.
“So much of the world now relies on these three or four big (cloud) compute companies who provide the underlying infrastructure that when there’s an issue like this, it can be really impactful across a broad range, a broad spectrum” of online services, said Patrick Burgess, a cybersecurity expert at U.K.-based BCS, The Chartered Institute for IT.
There was a sharp spike in users of Amazon Web Services (AWS) reporting issues early on Monday morning, according to Downdetector, leading to outages across the many websites, apps, and platforms that use AWS.
According to the website that monitors service provision failures, just before 3 am Eastern Time (ET) on Monday, users reporting issues with AWS suddenly began to increase – with 476 reports at 2.54 am ET. By 3.39 am ET there were 13,044 reports of issues with Amazon’s web services.
A map produced by the service showed there has been a high concentration of reports in New York City, St Louis (MO), Boston (MA), Los Angeles (CA), Seattle (WA), Dallas (TX), Atlanta (GA), Chicago (IL), and Detroit (MI).
According to Downdetector, issues have been reported across a wide range of sites, although it’s not clear if they are connected to the AWS outage or a different issue. Problems have been reported on:
Instructure
Crunchyroll
Roblox
Whatnot
Venmo
Amazon Alexa
Amazon
Coinbase
Snapchat
Canva
Duolingo
Goodreads
Ring
The New York Times
Life360
Fortnite
Apple TV
Verizon
Robinhood
Chime
Perplexity AI
McDonald’s App
CollegeBoard
Wordle
PUBG Battlegrounds
Users have also taken to social media to report the issues, with some asking why “everything was down,” and others saying services weren’t connecting despite having working Wi-Fi connection.
Forbes has published an into Amazon’s efforts to court law enforcement clients for artificial intelligence and surveillance services. The article reveals that not only is the company promoting Amazon Web Services as a potential police tool, but it has been partnering with other businesses in that sector to use its cloud infrastructure. According to the Forbes report, Amazon’s partners that are pitching police departments include car tracking tools and license plate readers from Flock Safety, gun detection by ZeroEyes, real-time crime center apps from C3 AI and Revir Technologies, and AI that helps compose police reports from Abel Police and Mark43. The piece estimated that the police tech business is worth $11 billion. Based on emails sent by members of Amazon’s law enforcement and safety team, the company is working awfully hard to get a share of those billions.
The company’s aggressive sales work has raised outcry for privacy issues around how police officers might use these tools, which is unsurprising given that AI tools can and easily . Regulation is still a affair and some law enforcement departments have failed to .
“It’s dismaying to see one of the largest and most powerful companies pushing authoritarian surveillance tech in this way,” ACLU Senior Policy Analyst Jay Stanley told Forbes. “I didn’t realize Amazon was serving as a midwife for AI law enforcement technologies.”
Right now is a great time to invest in technology stocks — for two reasons. First, we’re at the beginning of the growth story for a promising new area, and that’s artificial intelligence (AI). JPMorgan Chase Chief Executive Officer Jamie Dimon has even said that AI could be as transformational for the world as the steam engine and the internet. And analysts predict that in just the time frame of today through 2030, the AI market could grow from $200 billion to more than $1 trillion.
Second, some of these players are trading at reasonable valuations right now considering their long-term prospects. That offers investors an opportunity to get in on this exciting growth story at a fair price.
So, if you have $50,000 to invest and are looking to buy growth stocks, it’s a great idea to pick up technology players that operate in the AI space, from designers of AI products to those who use them or sell AI services to others. I would spread this investment across several players and of course, make sure that this is in the context of a diversified portfolio; it’s always best to invest across a few sectors in case one falls on hard times.
To increase the safety of this bet, I favor companies that don’t rely uniquely on AI and prior to this boom, already built profitable businesses. Considering all of this, here are the best stocks to invest $50,000 in right now.
Image source: Getty Images.
Amazon
Amazon(NASDAQ: AMZN) may be the safest of all AI bets thanks to its diversification across high-growth industries. The company is a leader in e-commerce and in cloud computing through its Amazon Web Services (AWS) business. These two major areas have helped Amazon generate billions of dollars in revenue and profit in recent years. And today, Amazon’s investment in AI is adding to the gains.
This market giant is benefiting from AI in two ways. First, Amazon uses the technology to increase its own efficiency in e-commerce — for example, selecting the fastest delivery routes for packages. This should lower Amazon’s costs and in turn, boost profit. Second, AWS is going all in on AI, offering a wide range of products and services to fulfill just about every need of a customer launching an AI project. AWS recently reached a $105 billion annual-revenue run rate thanks to this focus on AI.
Today, Amazon shares trade for 39 times forward-earnings estimates. This isn’t dirt cheap but remains very reasonable considering the company’s solid market position.
Oracle
Oracle(NYSE: ORCL) is an up-and-coming AI powerhouse. Originally known for its database software, Oracle has shifted to prioritizing cloud infrastructure in recent times — and it’s been a worthwhile bet because the company has seen demand and revenue take off.
In the most-recent quarter, for example, cloud-infrastructure revenue soared 45% to $2.2 billion, and total remaining-performance obligations (RPO) — representing contract backlog — surged 53% to $99 billion. All of this offers investors a reason to be optimistic about growth ahead.
Another positive point is Oracle has signed multicloud agreements with market giants AWS, Microsoft, and Alphabet‘s Google Cloud. These allow customers to use Oracle’s database technology through any of these cloud providers. So Oracle has made itself easy to access and on top of this, gives customers additional types of flexibility, such as Oracle Alloy, which allows partners to customize their cloud experience.
Oracle shares trade for 26 times forward-earnings estimates right now, higher than in the past but a deal considering Oracle’s AI growth.
Meta Platforms
You may use a Meta Platforms(NASDAQ: META) service daily if you message a friend on WhatsApp or Messenger, or post something to Instagram or Facebook. Meta owns these top social media apps and thanks to advertisers on these platforms, the company has generated billions of dollars in earnings.
I expect this to continue since Meta has a solid moat, or competitive advantage. It’s very difficult for users to switch to other platforms, knowing that many of their contacts may not follow. After all, about 3.2 billion people worldwide use at least one of Meta’s apps daily.
But Meta isn’t stopping there. The company has made AI its biggest investment area this year and already has launched its first virtual assistant. In fact, the company aims to create AI tools for professional and leisure purposes to suit the needs of every Meta user. And that may be just the beginning, as Meta is exploring a wide array of AI products and services with the aim of being a leader in the space.
All of this makes the stock look particularly cheap at only 26 times forward-earnings estimates.
Nvidia
This article wouldn’t be complete without mentioning the star of the AI market right now, and that’s Nvidia(NASDAQ: NVDA). Some investors have worried about investing in this chip designer since earnings and share performance have soared so much in recent years. Profit has climbed in the triple digits into the billions of dollars quarter after quarter, and the stock has advanced more than 400% over the past three years.
So, the worry is Nvidia’s strongest wave of growth may have passed, and rivals may slip ahead. I wouldn’t expect Nvidia to register such earnings or share performance non-stop. But I think the growth opportunity is far from over, and a new wave of growth may be just ahead. It’s important to remember that Nvidia is the market leader, and its focus on innovation should keep it there.
The company now is planning for the launch of new architecture Blackwell, a platform that should supercharge growth and could lead to more share performance down the road.
And that’s why Nvidia’s valuation at 42 times forward-earnings estimates looks fair, and it’s worth picking up this winning stock at these levels.
Should you invest $1,000 in Amazon right now?
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Migrating to Amazon Web Services (AWS) is a journey. It often feels daunting to start this journey, but it doesn’t have to be. With this article, I will run through five key strategies that when used in isolation, as well as when combined, will go a long way in ensuring your migration to AWS is as seamless as possible.
1. Follow a proven process
A successful migration is as much about the preparation as it is about the act of moving workloads. Fail to prepare, prepare to fail as the adage goes. The migration journey can be broken up into four key steps.
Discover: At this stage, it’s about defining the initial scope as much as possible. Don’t worry about the why, how or when. Focus on documenting which workloads you’re aiming to migrate.
Assess: You now know what it is that you want to migrate. Here’s where you think about the why, how and when. Any migration should have clear technical and/or business drivers that can be articulated in a business case. At this stage, make an early call on how you want to migrate and in what order.
Mobilize: You wouldn’t build a house on top of weak foundations, so don’t migrate workloads without configuring AWS properly. Ensure you’re setting up a strong Landing Zone that adheres to the AWS Well-Architected Framework. That way, you’ll be secure, operationally ready and aware of costs from day one.
Migrate and modernize: At the sharp end of the process, it’s all about migrating applications and modernizing them. This should be seamless if you’ve done the preparation right. You’ll need to consider aspects such as when, or if, you can tolerate a cutover window, as well as clearly document rollback plans if it doesn’t go quite to plan.
2. Assign a migration pattern to each workload early
AWS defines a set of migration patterns known as the 7Rs. This set of patterns covers the full spectrum, all the way from retiring workloads to completely re-architecting them to take advantage of all that AWS has to offer. A full list of the 7Rs can be found below.
Retire
Retain
Rehost
Relocate
Repurchase
Replatform
Refactor
Assigning a migration pattern to each workload early, typically in the Assess phase, sets the scene for the latter phases of Mobilize and Migrate. These patterns aren’t set in stone, but establishing a north star for your migration helps to keep the journey heading in the right direction.
3. Don’t just transform your technology, transform your business
People, process and tools are the trio that many of you will be familiar with. The domains that are integral to a successful migration are no different. When embarking on a migration, it’s all too easy to get caught up in the new and shiny world of designing AWS architectures and dreaming of the better times to come. You must not forget what underpins any successful migration — operational readiness.
Operating workloads on AWS bring with it several changes to consider in your operational posture. Amongst them, you should prioritize these highest:
Cloud financial management: AWS brings with it a very different cost model — there is a sudden shift from capital expenditure (CapEx) to operating expenses (OpEx). On-premises, it is often easy to attribute capital costs — you’re able to directly link a physical piece of infrastructure purchased to the cost center that requested it. With AWS, you need to consider how, or if, you want to attribute costs at an increased granularity and implement the necessary mechanisms to enable it.
Resiliency and disaster recovery (DR): A major advantage of migrating to AWS is the increased possibility for resiliency, but have you considered your resiliency requirements? Defining your return-to-operations (RTO) and recovery-point-objective (RPO) targets helps to determine what level of resilience you require. AWS has published an excellent whitepaper on DR in the cloud, including guidance on how to define a DR strategy depending on your RTO and RPO targets, all whilst balancing with appetite for additional spend.
Security: Operating in the cloud brings with it a shift in mindset when it comes to security. You work on the basis of a “Shared Responsibility Model,” where AWS is responsible for the security of the cloud (i.e., physical security of the data centers), and you are responsible for security in the cloud (i.e., the configuration of your workloads). You need to consider how this impacts your existing tools and processes and evaluate whether cloud-native security tools are better placed to serve you.
The Well-Architected Framework contains prescriptive guidance spread across six pillars, designed to make it easy to design and implement solutions that adhere to best practices. The pillars are Operational Excellence, Security, Cost Optimization, Reliability, Performance Efficiency and Sustainability.
Within the framework exists the concept of lenses. These are workload or use-case-specific additions to the standard guidance. One such lens is the migration lens. It covers the usual pillars but provides specific migration-related guidance aligned to the familiar proven phases of the migration journey (discover, assess, mobilize, migrate and modernize).
Keeping this framework and any additional lenses in mind and evaluating against the guidance throughout the migration journey will increase the chance of successful decision-making and subsequently a seamless migration.
5. Leverage specialist AWS partners
For large and complex migrations, it’s worth working with a specialist partner to support your journey. AWS makes it easy to identify the right partner through a variety of specialization programs. There are three key types of specializations to consider when you evaluate a partner:
Competencies: These are externally audited awards that verify that a partner has deep expertise and proven experience in either an industry (e.g., Financial Services), use-case (e.g., Migration and Modernization) or workload type (e.g., Microsoft).
Service delivery: These are focused specifically on an AWS service (e.g., Amazon RDS) and are awarded when partners can demonstrate that they can deliver solutions using said service to a consistently high standard and in accordance with best practices.
Well-Architected: The Well-Architected Framework that we discussed earlier has a dedicated partner program that recognizes those partners that are particularly experienced at designing for, evaluating against and remediating to get to AWS best practices.
You should now have several key strategies front of mind to aid in making your migration seamless. Working to a proven process and leveraging a specialist partner where necessary, keeps your journey on the straight and narrow. Mapping your workloads to migration patterns as early as possible sets you up to make use of the Well-Architected Framework as you get ready to design your target architecture. Finally, don’t forget to take the whole organization on the migration journey. A successful migration can only be considered truly successful if everyone is bought into and benefits from the transformation.
Amazon Web Services has started an investigation to determine whether Perplexity AI is breaking its rules, according to Wired. To, be precise, the company’s cloud division is reportedly looking into allegations that the service is using a crawler, which is hosted on its servers, that ignores the Robots Exclusion Protocol. This protocol is a web standard, wherein developers put a robots.txt file on a domain containing instructions on whether bots can or can’t access a particular page. Complying with those instructions is voluntary, but crawlers from reputable companies have generally been respecting them since web developers started implementing the standard in the ’90s.
In an earlier piece, Wiredreported that it discovered a virtual machine that was bypassing its website’s robots.txt instructions. That machine was hosted on an Amazon Web Services server using the IP address 44.221.181.252 that’s “certainly operated by Perplexity.” It reportedly visited other Condé Nast properties hundreds of times over the past three months to scrape their content, as well. TheGuardian, Forbes and The New York Times had also detected it visiting their publications multiple times, Wired said. To confirm whether Perplexity truly was scraping its content, Wired entered headlines or short descriptions of its articles into the company’s chatbot. The tool then responded with results that closely paraphrased its articles “with minimal attribution.”
A recent Reuters report claimed that Perplexity isn’t the only AI company that’s bypassing robots.txt files to gather content used to train large language models. However, it seems like Wired only provided Amazon with information on Perplexity AI’s crawler. “AWS’s terms of service prohibit abusive and illegal activities and our customers are responsible for complying with those terms,” Amazon Web Services told us in a statement. “We routinely receive reports of alleged abuse from a variety of sources and engage our customers to understand those reports.” The spokesperson also added that the company’s cloud division told Wired it was investigating information the publication provided as it does all reports of potential violations.
Perplexity spokesperson Sara Platnick told Wired that the company has already responded to Amazon’s inquiries and denied that its crawlers are bypassing the Robots Exclusion Protocol. “Our PerplexityBot — which runs on AWS — respects robots.txt, and we confirmed that Perplexity-controlled services are not crawling in any way that violates AWS Terms of Service,” she said. Platnick told us that Amazon looked into Wired’s media inquiry only as part of a standard protocol for investigating reports of abuse of its resources. The company has apparently not heard from Amazon about any type of investigation before Wired contacted the company. Platnick admitted to Wired, however, that PerplexityBot will ignore robots.text when a user includes a specific URL in their chatbot inquiry.
Aravind Srinivas, the CEO of Perplexity, also previously denied that his company is “ignoring the Robot Exclusions Protocol and then lying about it.” Srinivas did admit toFast Company that Perplexity uses third-party web crawlers on top of its own, and that the bot Wired identified was one of them.
Update, June 28, 2024, 2:20PM ET: We have updated this post to add Perplexity’s statement to Engadget.
Update, June 28, 2024, 8:27PM ET: We have updated this post to a statement from Amazon Web Services.
Tech stocks have a long reputation for providing consistent and significant gains over the long term, proven by the Nasdaq-100 Technology Sector’s 395% rise over the last 10 years.
The industry’s ever-expanding nature is driven by reliable demand for upgrades to various hardware and software products. So, it’s unsurprising that investing mogul Warren Buffett’s holdings company, Berkshire Hathaway, has dedicated more than 40% of its portfolio to tech stocks. Meanwhile, Berkshire’s holdings posted a compound annual gain of nearly 20% between 1965 and 2023.
As a result, it could be worth following suit and making a sizable long-term investment in the high-growth sector. So, here are three stocks to invest $30,000 in right now — $10,000 for each.
1. Advanced Micro Devices
Advanced Micro Devices(NASDAQ: AMD) business has exploded over the last decade, taking on a leading role in the chip market.
A decade ago, the company was on the brink of bankruptcy, bleeding money alongside mounting debt. Then, in 2014, Lisa Su became AMD’s CEO, triggering one of the most impressive turnarounds in the tech market’s history.
The launch of its Ryzen line of central processing units (CPUs) in 2017 has been a major growth catalyst, with AMD’s CPU market share rising from 18% in the first quarter of 2017 to 33% in 2024. The company has gradually chipped away Intel‘s share, which fell from 82% to 64% in the same period.
AMD Chart
Shares in AMD have soared 3,500% over the last 10 years. As a result, an investment of $10,000 in AMD’s stock in 2014 would be worth more than $357 billion today.
Of course, past growth doesn’t always indicate what’s to come. However, the company has an exciting outlook that could deliver major gains over the next 10 years. AMD is investing heavily in artificial intelligence (AI), launching new AI graphics processing units (GPUs) this year and investing in AI personal computers.
The AI market hit nearly $200 billion last year and is projected to reach nearly $2 trillion by 2030. Alongside positions in other areas of tech, such as cloud computing, video games, and consumer PCs, AMD will likely continue benefiting from the tailwinds of tech for years.
Consequently, an investment of $10,000 in AMD’s stock over the next decade could deliver significant gains.
2. Amazon
It’s impossible to deny Amazon‘s (NASDAQ: AMZN) potent role in tech. Thanks to its popular e-commerce site, the company has built up immense brand loyalty worldwide. Amazon’s retail site is available in over 20 countries and ships to more than 100 nations.
The success of Amazon’s e-commerce business has seen annual revenue climb 546% since 2014, with operating income skyrocketing by more than 20,000%.
Amazon’s meteoric rise is primarily owed to its lucrative Prime membership. Its subscription-based model bundles multiple services, including free expedited shipping on its retail site, video streaming, music, gaming, and more. Including multiple services makes consumers less likely to unsubscribe, leading to a global subscriber count above 230 million.
AMZN Chart
Shares in Amazon have risen 926% since 2014, meaning an investment of $10,000 back then would be worth over $102,000 today. And the company could potentially beat that growth over the next 10 years.
In addition to consistent retail growth, Amazon is rapidly expanding in AI and cloud computing. On April 25, the company announced plans to invest $11 billion to build data centers in Indiana to grow Amazon Web Services (AWS).
The company is on a promising growth path, and if you have the means, it could be worth an investment of $10,000 this month. However, a smaller investment is still worth considering.
3. Apple
Apple(NASDAQ: AAPL) is easily one of the most successful companies in tech history. Its market cap of $2.6 billion makes it the world’s second-most-valuable company (only after Microsoft). Meanwhile, Apple’s vast and loyal user base has allowed it to achieve leading market shares in multiple product categories.
However, the company has stumbled over the last year. Macroeconomic headwinds led to repeated quarters of revenue declines in 2023. Apple’s Q1 2024 seemed to break the streak, with revenue rising 2% year over year.
Meanwhile, the tech giant’s free cash flow hit $107 billion, significantly more than Microsoft, Amazon, or Alphabet. The considerable difference could suggest Apple is best equipped to keep investing in its business and come back strong in the coming years.
AAPL Chart
Apple’s stock has increased by 738% over the last decade. Consequently, a $10,000 investment in its shares 10 years ago would be worth nearly $84,000 today.
Moreover, like AMD and Amazon, Apple is taking on AI head-on. Over the last year, the company has gradually added AI-driven features across its product range, with plans to overhaul its MacBook lineup to focus on AI. The company also recently acquired French AI company Datakalab, which specializes in on-device processing.
Apple’s dominating role in tech and exciting outlook could make it worth investing $10,000 in its stock, with plans to hold for at least a decade.
Should you invest $1,000 in Advanced Micro Devices right now?
Before you buy stock in Advanced Micro Devices, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $537,557!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, and Microsoft. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
Many people know Michael Burry from the book The Big Short, or the movie that was based on it. Both chronicled the story of a ragtag group of investors who bet against the U.S. housing market before the 2008-2009 financial crisis, shorting mortgage-backed securities at a time when everyone else thought housing was set to go up forever. Burry is still investing today, and runs Scion Asset Management.
In 2023’s fourth quarter, Scion Asset Management reported two purchases that may surprise his value-investing followers: Amazon(NASDAQ: AMZN) and Alphabet(NASDAQ: GOOG). These “Magnificent Seven” growth stocks have typically been shunned by value investors due to their high earnings multiples. Yet as of the end of 2023, they made up 10% of Burry’s stock portfolio.
So why did Burry open positions in Amazon and Alphabet?
Amazon: Profits are finally arriving
At first glance, Amazon seems overvalued. Its price-to-earnings ratio (P/E) of 62 is more than twice the average of the S&P 500 index (28, as of this writing). However, when you look under the hood, it is clear that Amazon did not show its true profit potential in 2023. Throughout last year, the e-commerce and cloud computing giant expanded its operating margin, leading to approximately 7.5% margins for the last two quarters. That was up significantly from the 2.5% margins it posted in late 2022 and early 2023.
Had Amazon been earning a 7.5% profit margin for the entire year on its total revenue of $575 billion, it would have generated $43 billion in profits in 2023. Against its current market cap of $1.9 trillion, that would have given it a P/E of 44. But even this doesn’t tell the full story. Amazon’s profit margins should continue to move higher in 2024, for multiple reasons. First, its high-margin cloud computing division, Amazon Web Services (AWS), continues to shine. Second, it is seeing strong growth from higher-margin e-commerce services such as third-party selling management and advertising. Advertising revenues, for reference, grew by 26% year over year last quarter.
If Amazon’s profit margin reaches 10% in 2024 and its revenue grows by 10% to $630 billion, it will generate $63 billion in earnings this year. That would give it a P/E of 30, or right around the S&P 500’s average. Burry likely anticipates that profit inflection happening as well, which would explain why he is buying shares for Scion Asset Management’s portfolio.
Alphabet: From AI loser to AI winner
Burry’s other Magnificent Seven bet, Alphabet, is not optically expensive, but it faced some major negative narratives throughout 2023. At the beginning of 2023, the tech giant traded at a P/E ratio below 15, likely due to investor fears that it was losing the race in AI to upstarts such as OpenAI. Today, it trades at a P/E of 27, which is still slightly below the S&P 500 average, even though the stock is up 77% year to date.
Burry and other investors likely expect Alphabet to maintain its overwhelming share of the search market, which gives it a lucrative digital advertising business. Google Search’s market share has remained remarkably steady despite all these new AI competitors, at over 90% according to the latest estimates. In the fourth quarter of 2023, Google Search revenue grew 12.7% year over year to $48 billion.
Alphabet also has promising businesses in YouTube and Google Cloud. YouTube is the dominant player in video streaming worldwide, generating $9.2 billion in advertising revenue last quarter and hitting 100 million premium subscribers. Google Cloud does right around the same in quarterly revenue and is growing sales by 25% year over year.
If Alphabet maintains its lead in Google Search and keeps growing YouTube and Google Cloud, the stock will likely do well over the long term.
Learn from investing greats, but don’t copy them
Looking through the portfolio holdings of famous investors can be insightful. But nobody should be out there blindly buying up every company in Burry’s portfolio.
First off, we outsiders can’t know what Burry’s actual theses are on these two stocks. His reasons for holding them may differ from your own, and that could create some discomfort for you if the stocks start falling. Second, the investing public only finds out about hedge funds’ moves through their 13-F filings with the Securities and Exchange Commission. These filings are due a month and a half after the end of the quarter they cover, and the most recent ones describe where their portfolios stood at the end of 2023. As such, we can have no idea if Burry has bought or sold Amazon and Alphabet shares in 2024, or if he even has any exposure to the stocks right now. This informational time lag makes trying to copy the moves of famous investors a dangerous idea.
Learn from the investing greats, but don’t copy them. It’s better to build your portfolio with stocks you believe in, not stocks you believe that others believe in.
Should you invest $1,000 in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Brett Schafer has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet and Amazon. The Motley Fool has a disclosure policy.
The Nasdaq Composite index has had a great year so far, and we’re only a few months into 2024. Technology stocks, which dominate the index, are roaring higher as investors favor growth and innovation such as artificial intelligence (AI) stocks, chip designers, and cloud computing players. This has pushed the index to a record high, confirming that it’s reached bull territory.
And if history is a guide, the Nasdaq’s winning streak may not be over. Over the past six periods of stock market gains dating back to 1990, the Nasdaq has climbed an average of 64% in the first two years of positive performance. The index advanced about 43% last year and so far has climbed 8% this year — so if it follows historical patterns, the Nasdaq could soar this year. Here are my top AI growth stocks to buy before it does…
Image source: Getty Images.
Amazon
Amazon (NASDAQ: AMZN) shares have advanced 20% so far this year, and this top stock could just be getting started. That’s because Amazon is an ideal AI stock to buy: The company is using the technology to improve its e-commerce operations, and it’s also selling AI products and services to cloud computing services customers through its Amazon Web Services (AWS) unit. So, it’s benefiting from AI in two ways.
For example, Amazon uses AI to help it streamline fulfillment center operations and select the shortest delivery routes. This is key because it could reduce the company’s cost to serve.
And AWS has made addressing every level of AI needs a priority, so it offers customers the basics like chips for their training and inference programs as well as a fully managed service that allows them to customize top large language models (LLMs) for their own use. Considering AWS is the world’s leading cloud services player, it already has an enormous audience present — and ready to launch AI projects.
So, it’s clear AI could have a significant impact on Amazon’s earnings growth over time through streamlining e-commerce processes and reducing costs there, and by boosting AWS revenue.
Today, Amazon shares trade for 43 times forward earnings estimates, which looks like a reasonable price for a growth stock — especially one with a solid profitability picture and a compelling AI strategy.
Intel
Intel(NASDAQ: INTC) has struggled to keep up in the AI race, but the tide recently may have turned. The chip company late last year introduced a portfolio of AI products that could up its game and drive a new era of growth. An example is the Intel Core Ultra mobile processor family, a key step to kick off the age of the AI personal computer — these are high-power computers that can carry out many AI tasks.
Intel also announced its latest Intel Xeon processor family with AI acceleration and its Gaudi 3 AI accelerator. I wouldn’t expect these innovations to threaten chip market giant Nvidia‘s leadership, but that’s OK. Considering the opportunity — with the AI market forecast to top $1 trillion by the end of the decade — there’s room for more than one company to carve out market share and benefit. Intel could be one of them thanks to its new and upcoming innovations.
On top of this, Intel’s move to open its manufacturing network up to others, with the goal to become the world’s second-biggest foundry by 2030, could supercharge growth. It’s a big bet, but one that could bring major rewards down the road. Intel already has won commitments from four customers for its 18A process and signed five advanced packaging deals.
Intel shares trade for 29 times forward earnings estimates, a bargain considering the company’s AI and foundry prospects as well as analyst estimates for double-digit annual growth over the next five years. So Intel could be ripe for a rebound, making now an ideal time to get in on this technology giant.
Should you invest $1,000 in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
The Nasdaq hit a new record high recently, and the good times may be far from over. History shows us that over the past 10 periods of annual market declines — dating back to the early 1970s — the index always has climbed for at least two consecutive years afterward. And on all but one occasion, the index posted a double-digit increase during its second year of gains. If this trend continues, the Nasdaq, heading for a 7.4% increase so far, is set to climb higher in 2024.
And the stocks that have led the gains and could continue leading the movement are artificial intelligence (AI) players. Investors are excited about this high-growth, high-potential technology. AI may make game-changing moves — like bringing lifesaving drugs to patients more quickly — and could save companies and individuals money and time as it completes tasks and solves problems.
That’s why right now is the perfect time to get in on potential AI powerhouses. Let’s check out two AI stocks to buy hand over fist before the Nasdaq soars higher.
Image source: Getty Images.
1. Amazon
Amazon(NASDAQ: AMZN) is benefiting from AI in two ways. The company uses AI across its e-commerce business to streamline operations and improve the customer experience. And Amazon sells AI solutions to customers through Amazon Web Services (AWS), its cloud computing business.
In e-commerce, Amazon’s AI will help you choose a product based on your buying history, and AI is helping the company choose the best delivery routes for packages. These and other AI efforts should keep customers coming back and boost Amazon’s profitability.
As for AWS, the service offers everything from chips for customers to train their own AI models to a fully managed service that allows customers to customize the most popular large language models (LLMs) to suit their needs. AWS customers can access the company’s own lower-cost chips, as well as the fastest, highest-performing chips and services from AI chip market leader Nvidia(NASDAQ: NVDA).
All of this could make Amazon one of the winners of a potential AI revolution. And Amazon already has a solid earnings track record — so the company has the resources to invest in this hot area and continue to grow. In the most recent quarter, Amazon’s net sales rose in the double digits, and operating income more than quadrupled to surpass $13 billion.
Today, the stock trades for 42x times forward earnings estimates, a fair price for an already solid business with top AI prospects.
2. Nvidia
Nvidia holds 80% of the AI chip market, and though it faces competitors in the space, it’s unlikely to lose its lead any time soon for two reasons. First, the company’s first-to-market advantage and brand strength should keep at least some customers loyal. Second, Nvidia is pouring investment into research and development to stay ahead.
Investors expect the launch of Nvidia’s H200 chip in the second quarter and then potentially the launch of the Blackwell architecture along with the B100 chip later in the year. These newer products are improvements on the company’s already fastest-on-the-market chip.
But Nvidia doesn’t only design chips. The company also offers a full portfolio of products and services for the AI client, including a software platform that serves as an “operating system” for AI. Nvidia products are offered on AWS, as mentioned, but also through all other major cloud providers. So it’s easy for customers to access Nvidia’s offerings directly through their cloud service.
Nvidia’s earnings have soared, but growth may be far from over considering the company’s market leadership — and likelihood of remaining on top. Today, Nvidia trades for 35x times forward earnings estimates, which seems reasonable for such a solid growth stock. That’s why Nvidia makes a no-brainer addition to any AI portfolio.
Should you invest $1,000 in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.
Without a doubt, many artificial intelligence (AI) investors are kicking themselves for missing out on Nvidia‘s big gains. With the stock up 280% in the last year and over 1,800% in five years, it is one of the major beneficiaries in the AI space.
Nonetheless, Nvidia is not the only AI stock in the chip industry, and AI is so much more than semiconductors. With the breadth of AI investing options, the industry should continue to bring opportunity. Three Fool.com contributors have ideas on where AI investors can look next: Amazon(NASDAQ: AMZN), The Trade Desk(NASDAQ: TTD), and Tesla (NASDAQ: TSLA).
Amazon has many ways to win when it comes to AI
Jake Lerch (Amazon): There are hotter AI stocks out there, but Amazon remains one worth watching, and buying. Here’s why:
First, the company is the largest cloud services provider. Amazon Web Services (AWS) is estimated to have about 31% of the worldwide cloud services market. That’s important because new generative AI tools and applications often utilize cloud services like AWS. As the AI revolution rolls on, Amazon is poised to profit thanks to its lead in the cloud infrastructure market.
Second, Amazon’s massive e-commerce business dovetails nicely with many different AI applications. For example, the company has already introduced Rufus, a new AI-powered shopping assistant designed to help people by answering questions, making pricing comparisons, and generating product recommendations.
In addition, Amazon is using AI in many other areas of its operations, such as:
Streamlining prescription drug delivery time and cost through Amazon Pharmacy.
Lowering the company’s environmental impact through AI-generated recommendations to reduce packaging use.
Improving shopping recommendations via Amazon Fashion.
Updating Alexa-enabled devices to enhance conversation and dialogue between users and Alexa.
On top of all of that, Amazon remains one of the world’s best-run companies. Shares are up 73% over the last 12 months, while revenue growth has bounced back to a solid 13%.
In short, Amazon remains a smart choice for AI-focused investors.
The Trade Desk benefits from AI and digital advertising tailwinds
Justin Pope (The Trade Desk): Artificial intelligence is a hot topic today, but it began disrupting the advertising business several years back when The Trade Desk was in its infancy. Brands and other companies can buy advertising on The Trade Desk’s platform, which uses AI and user data to match ads to potential customers. This is far more effective than traditional advertising, which would broadcast to broad audiences on television, radio, or in print.
The Trade Desk has thrived, growing profitably since its 2016 initial public offering. The reason? The Trade Desk sits in an ideal spot in the industry. Advertising dollars are shifting to digital mediums and while competitors like Meta Platforms and Alphabet operate with limited transparency, The Trade Desk offers more information to its clients, and that is winning over customers.
TTD Revenue (TTM) Chart
Total worldwide ad spending in 2023 was an estimated $830 billion, which means that The Trade Desk’s $9.6 billion in gross ad spending translates to just over 1% of market share. That leaves a tremendous growth runway for this company operating outside the closed ecosystems of big technology companies.
The Trade Desk’s long-term growth opportunities and profitable business model make the stock a no-brainer AI investment you can hold for the long term.
Tesla likely has some AI-driven surprises under the hood
Will Healy(Tesla): Investors may tend to look at Tesla as an automaker, but it’s actually a diverse business also developing battery technology, solar energy solutions, and AI breakthroughs.
Instead of relying on chip companies like Nvidia for its technology, Tesla has developed its own semiconductor and robotics solutions. Among these are the Dojo chip, designed to power neural networks, and the FSD (full self-driving) chip, which would power fully autonomous vehicles.
CEO Elon Musk wants to launch a robotaxi business based on Tesla technology. With robotaxis, analysts at Cathie Wood’s Ark Invest believe Tesla’s revenue could reach a minimum of $600 billion by 2027, over seven times the 2023 level of $82 billion.
Wood believes that growth would take Tesla’s stock price to $2,000 per share, a more than tenfold gain from today’s levels.
While that may seem outrageous, and Musk has a track record of being overly ambitious in his promises, Wood predicted a split-adjusted price target of $267 per Tesla share in 2018. Within less than three years, Wood’s prediction came to pass, so she could be right again.
Tesla’s stock price has pulled back as Tesla has cut prices on electric vehicles (EVs) to boost sales and stay competitive with emerging rivals. That pessimism has taken its P/E ratio down to 45, a low valuation rarely seen in the stock’s history.
Although profits are expected to fall 1% this year, analysts predict a 36% increase in 2025. These earnings forecasts give some validation to Wood’s thesis. Some of that optimism may be related to the release of the lower-cost, compact Model 2 EV expected for 2025, and investors are also likely to jump in as the company improves its AI and self-driving capabilities.
Should you invest $1,000 in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in Alphabet, Amazon, Nvidia, and Tesla. Justin Pope has no position in any of the stocks mentioned. Will Healy has positions in The Trade Desk. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Nvidia, Tesla, and The Trade Desk. The Motley Fool has a disclosure policy.
Do you remember first hearing about this strange thing called “the cloud”? It was probably sometime in the 2010s. Many said it would be a massive boon for tech companies — and they were right.
Spending on public cloud usage rose from $31 billion in 2015 to nearly $200 billion in 2023. Microsoft‘s Intelligent Cloud and Amazon‘s (NASDAQ: AMZN) Amazon Web Services (AWS) provide terrific revenue streams with annual run rates of over $100 billion each. This technology has been the linchpin driving total returns of over 900% since 2015 for both stocks.
Artificial intelligence (AI) looks like the next big thing. Some say it will be as transformative as the internet. The International Monetary Fund says it will change nearly 40% of jobs worldwide, and data compiled by Statista shows the AI market will increase sixfold from $300 billion this year to over $1.8 trillion by 2030.
A bar chart showing estimates of increased AI spending.
Here are four companies taking advantage of the growth in AI with the potential to make investors very happy in the next six years.
Palantir
Palantir(NYSE: PLTR) is a popular stock, and much of the hype is deserved. Managing, analyzing, and using data to optimize decision-making are at the core of its business. And its platforms for the private sector and governments use AI to do this.
Palantir’s newest product, Artificial Intelligence Platform (AIP), is also built for the defense and the private sectors, where it deploys on the customer’s network and leverages large language models (LLMs). What exactly does this mean? Here’s an example from Palantir.
Say that you’re a military operator in charge of forces in the field, and data comes in saying the enemy is amassing equipment nearby. The operator can visualize the field and ask questions such as, “What enemy units are nearby?” and “What are likely enemy formations?” Then, they can direct drones or satellites to capture images. Using this technology assists the operator with planning and operational decisions.
Palantir has historically done well with defense revenue. This is a terrific source of income because governments have deep pockets. However, the private sector also offers a massive marketplace.
The company’s commercial revenue grew 32% year-over-year (YOY) in the fourth quarter of 2023 to $284 million (an acceleration from the 23% YOY growth in Q3), and government revenue grew 11% to $324 million. Palantir was also profitable on a generally accepted accounting principles (GAAP) basis for the fifth straight quarter — an impressive achievement for a high-growth tech company.
The stock trades for 25 times sales, which isn’t cheap, but this falls to 20 on a forward basis using sales estimates. There’s short-term risk because of the valuation, so consider buying over time. In the long term, Palantir’s AI credentials are top-notch.
UiPath
Here’s a phrase to add to your vocabulary: robotic process automation (RPA). This takes tedious and non-value-adding tasks and automates them.
For example, a mortgage broker may spend hours reviewing emails, downloading attachments, and manually entering data into applications. With RPA, this can be automated, freeing the broker to focus on higher-level tasks like communicating with underwriters and reaching out to customers. This is an example of what UiPath(NYSE: PATH) can do for its customers.
Speaking of customers, UiPath boasts over 10,800 of them, and they provide $1.4 billion in annual recurring revenue (ARR). Sales came in at $326 million in the third quarter of UiPath’s fiscal 2024 (the three months ended Oct. 31, 2023) on 24% growth, which is impressive, considering the challenging economic environment in 2023. UiPath also has a fortress-like balance sheet with $1.8 billion in cash and investments and no long-term debt.
UiPath has stiff competition in a fragmented industry, which may be the most significant risk for investors. The company is also not GAAP profitable, although it is cash-flow positive. The stock trades for 11 times sales, which is reasonable for the industry.
RPA has the potential to save companies vast amounts of money by automating low-level tasks, and UiPath could be a significant long-term beneficiary of this trend.
Evolv Technologies
Before I delve into this company, please note that this stock has a market cap of less than $1 billion, making it more speculative than others. Managing risk is crucial, so speculative stocks should only occupy a set portion of your portfolio, based on your age, i.e., how much time you have to make up losses, and risk tolerance. With that understanding, Evolv Technologies(NASDAQ: EVLV) sells fascinating technology that could save your life (and maybe make investors loads of money).
Currently, when entering a stadium or other venue, people stand in line to go through a metal detector one at a time, empty their pockets, and often get a second screening with a wand. It’s inefficient, and items are often missed.
Evolv’s technology is different. Multiple people can walk through the AI-powered machines, and the detectors look at various characteristics, such as shapes, to identify guns or knives, rather than alerting for everything metal, like car keys. Alerts show security personnel where the object is detected, and they take it from there.
Schools, hospitals, and stadiums are the target customers for Evolv. Several major sports teams, school districts, and medical campuses already use it. Ending ARR in Q3 2023 was $66 million on 129% year-over-year growth, and subscriptions jumped 137% to just over 4,000. With a market cap of $676 million, Evolv trades at a reasonable 10 times ARR and has loads of potential.
Amazon
I said there was at least one company in this article that you may have never heard of, but it’s probably not this one. Amazon is known for its online marketplace, but will also benefit tremendously from AI since AWS is the world’s leading cloud service provider.
AI software requires tons of data, and much of this will be processed in the cloud. Amazon also offers other AI solutions, like foundational models — which allow users to tailor AI software to their needs.
Amazon just released its Q4 2023 earnings, and they were spectacular. Total revenue was up 14% to $170 billion, along with significant increases in cash flow and operating income. As depicted below, the stock rose but still trades below its five-year average, based on sales and cash flow.
AMZN PS Ratio Chart
AI will give Amazon a boost that should please investors for years to come.
Should you invest $1,000 in Palantir Technologies right now?
Before you buy stock in Palantir Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bradley Guichard has positions in Amazon and UiPath. The Motley Fool has positions in and recommends Amazon, Microsoft, Palantir Technologies, and UiPath. The Motley Fool has a disclosure policy.
At the end of last September, Warren Buffett’s holding company Berkshire Hathaway controlled an even 10 million shares of Amazon(NASDAQ: AMZN). It isn’t a top holding, but at a recent value of around $1.6 billion, it’s more than just pocket change.
Buffett probably wishes he had acquired more shares of Amazon when it dipped in early 2023. The stock has soared about 75% from the low point it hit last March.
Image source: Getty Images.
Despite being way up already, analysts on Wall Street think it has more fuel in the tank. The consensus price target on Amazon suggests it can climb another 15% over the next 12 months.
Before rushing out to buy this or any stock based on encouraging estimates, there’s something investors need to understand. The investment bank analysts who set attention-getting price targets can quietly adjust those targets downwards if things don’t work out as hoped. Repairing the damage following a misguided estimate can cause to your portfolio’s performance isn’t so easy.
Here’s a closer look at Amazon in light of recent developments to see if it’s a smart stock to buy now.
Amazon swings back to profitability
Overinvestment during the early phase of the COVID-19 pandemic led to steep losses for Amazon in 2022. Long-term investors who confidently held the stock through the volatile period are being rewarded.
Wall Street analysts keep raising their price targets on Amazon because profits are back in a big way. Operations generated $36.8 billion in free cash flow last year, compared to an $11.6 billion outflow in 2022.
On the top line, Amazon was able to report total revenue that rose 12% year over year, thanks to double-digit percentage gains from all three of its operating segments.
Growth appears to be accelerating. Fourth-quarter sales rose 14% year over year, due in part to a record-breaking holiday shopping season.
Picks and shovels for the artificial intelligence (AI) gold rush
Amazon Web Services (AWS) is already the leading provider of cloud-computing services. The soaring popularity of generative artificial intelligence applications such as ChatGPT could make it even bigger in the years ahead.
The AWS segment is less cyclical than Amazon’s e-commerce operation and a lot more profitable. AWS contributed just 14% of total sales in the fourth quarter, but it was responsible for 55% of total operating income.
Amazon is positioning AWS to be a leading service provider for businesses of any description that want to develop, market, or employ power-hungry AI applications. To keep ahead of the competition, AWS will be the first to offer access to Nvidia‘s GH200 Grace Hopper Superchips.
AWS clients who insist on access to pricey Nvidia chips that most developers of AI applications are already familiar with have that option. The company is also positioning itself to serve cost-conscious businesses that don’t necessarily need access to Nvidia’s chips. Amazon’s proprietary Trainium2 chips are designed to run up to four times faster than the previous version.
An unbeatable e-commerce platform
In the early days of the COVID-19 pandemic, Amazon spent heavily to upgrade and expand its logistics network. Those investments make Amazon an indispensable partner, largely because consumers are already used to ultra-fast shipping that none of its competitors can match.
In 2023, the company delivered more than 7 billion packages with same-day or next-day service. Amazon now operates more than 55 dedicated same-day sites across the U.S. that are ramping up fast. The number of items shipped through same-day sites rose 65% year over year in the fourth quarter.
Free and fast shipping isn’t the only feature that makes $14.99-per-month Amazon Prime memberships hard to let go of. For example, Prime members can now access primary care services from One Medical for an additional $9 per month.
A buy now?
Amazon isn’t a bad stock to buy right now, but it might be riskier than you anticipate. Following a big run-up, its shares are trading for more than 47 times forward-looking earnings estimates.
Amazon has what it takes to overcome its high valuation and deliver market-beating gains over the long run. That said, there are no guarantees. If earnings don’t rise sharply throughout 2024, the bottom could fall out from under this stock and lead to swift losses. If you don’t have a high tolerance for risk, it’s probably best to wait for a more attractive price.
Should you invest $1,000 in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Cory Renauer has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, and Nvidia. The Motley Fool has a disclosure policy.
Snowflake(NYSE: SNOW) stock made big gains in Friday’s trading. The data technology company’s share price ended the daily session up 9.4%, according to data from S&P Global Market Intelligence.
While there wasn’t any company-specific news driving Snowflake higher today, the company’s valuation benefited from strong earnings results published by leading cloud services providers. In particular, Amazon’s better-than-expected fourth-quarter results helped give Snowflake’s share price a major boost.
Strong cloud demand bodes well for Snowflake
Snowflake is a leading provider of data-warehousing services and related analytics and data management technologies. The company’s Data Cloud platform helps large businesses and organizations combine information that is generated across Amazon, Microsoft, and Alphabet‘s cloud infrastructure services. In turn, strong demand indicators for leading cloud infrastructure providers tend to bode well for Snowflake’s performance.
Amazon’s published its fourth-quarter report after the market closed yesterday. The results showed that the company’s sales had grown 14% year over year to reach $170 billion, coming in significantly ahead of the average analyst estimate for sales of $166.2 billion. Sales for the company’s Amazon Web Services (AWS) division rose 13% year over year to hit $24.2 billion.
Amazon’s strong Q4 report came on the heels of better-than-expected results from Microsoft earlier in the week. For the second quarter of its current fiscal year, which closed at the end of December 2023, Microsoft posted revenue of $62.02 billion and beat Wall Street’s call for sales of $61.12 billion in the period. The software giant’s revenue was up 18% year over year in the period, and sales for its Azure infrastructure business and other cloud services rose 30% year over year.
Is Snowflake stock a buy?
Snowflake stock has seen strong momentum in conjunction with excitement surrounding artificial intelligence (AI) and improving demand outlooks for key cloud businesses. On the one hand, the company’s share price still trades down roughly 46% from the peak that it reached in 2021.
SNOW PS Ratio (Forward) Chart
Valued at roughly 20 times this year’s expected sales, Snowflake has a highly growth-dependent valuation. The company’s valuation profile means that its stock won’t be a great fit for every investor.
On the other hand, Snowflake is growing rapidly and is poised to continue playing an important role in the evolution of analytics and AI services. For risk-tolerant investors, the stock has the makings of a worthwhile portfolio addition, but you should weigh your personal tolerance for volatility before going in heavily on the stock.
Should you invest $1,000 in Snowflake right now?
Before you buy stock in Snowflake, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Snowflake wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Snowflake. The Motley Fool has a disclosure policy.
Amazon (AMZN) reported fourth quarter earnings that beat analysts’ expectations Thursday and delivered an optimistic outlook for the months ahead.
The stock climbed almost 7% in premarket trading on Friday.
Net sales came in at nearly $170 billion versus expectations of $166.2 billion. That’s 14% higher than the almost $150 billion the company generated during the same period in the prior year. The outlook for the current quarter also surpassed forecasts, with the company estimating an upper range of $143.5 billion.
“This Q4 was a record-breaking Holiday shopping season and closed out a robust 2023 for Amazon,” said CEO Andy Jassy in the earnings release.
Amazon’s muscular earnings report and subsequent investor response followed more critical receptions to some of its Big Tech siblings, which also largely beat estimates.
Here are some of Amazon’s most significant metrics compared to what Wall Street was expecting in the company’s fiscal fourth quarter, according to data from Bloomberg:
Revenue: $169.9 billion vs. $166.2 billion expected ($149.2 billion in Q4 2022)
Adjusted earnings per share: $1.00 vs $0.78 expected ($0.03 in Q4 2022)
Amazon Web Services: $24.20 billion vs $24.22 billion expected ($21.4 billion in Q4 2022)
Advertising: $14.7 billion vs. $14.2 billion expected ($11.6 billion in Q4 2022)
On Thursday the company also unveiled a new shopping assistant dubbed Rufus, trained on Amazon’s product catalog and broader information from the web. The generative AI-powered tool can answer customer questions and recommend products on the Amazon mobile app. Amazon said a small subset of customers will initially be able to use the chatbot and then the company will widen its release to more users in the US.
Amazon’s results arrive just weeks after the company eliminated several hundred roles across Prime Video and MGM Studios and announced a major reduction in staff at its video game livestreaming platform, Twitch, laying off more than 500 people. Staff cuts across tech highlight the sector’s painful climb down from an era of rapid expansion, as companies are still resizing and retreating from ambitious investments made during the early stages of the pandemic.
Executives said during the earnings call that it is still early days for deployment of AI products, but that revenues are “accelerating rapidly” as customers express interest in developing AI tools.
CEO Andy Jassy said that every consumer business at Amazon is developing multiple generative AI applications.
The company sees the potential for AI development to generate tens of billions of dollars for its cloud business. AI tools require huge amounts of data and processing power to train and run large language models and their applications, relying on cloud providers to provide vital infrastructure.
Amazon said that capital expenditures will increase in 2024, in large part due to the expansion of its AI operations. Cloud rivals Microsoft (MSFT) and Alphabet (GOOG, GOOGL) both reported double digit capex increases earlier this week.
Amazon began displaying ads on its streaming service Prime Video in recent days. Executives declined to share estimates on the scale of the new ads operation, but noted that expanding advertising on its streaming properties is an important part of its business model to continue investing in content. They anticipate that Prime Video will not present a heavy ad load for audiences, compared to network TV and others services.
Earlier this week Amazon’s streaming service, Prime Video, began playing ads alongside movies and shows as the default option for users, who can pay extra for an ad-free version. Analysts have noted the significant potential for ad growth given the massive scale of Amazon’s built-in audience.
The price of Amazon stock is shown on a screen at the Nasdaq MarketSite, Wednesday, Dec. 20, 2017, in New York. (Mark Lennihan/AP Photo, File) (ASSOCIATED PRESS)
In September, the company launched its AI service, dubbed Amazon Bedrock, which allows customers to build generative AI applications through existing models offered by Anthropic, Stability AI, and Amazon itself.
That same month Amazon also said it would invest up to $4 billion in the AI startup Anthropic as the biggest players in tech scramble for positioning in what they see as the coming age of the technology.
Amazon Web Services, the biggest player in the cloud industry, claims about 30% of market share, followed by Microsoft Azure and Google Cloud. The trio collectively account for roughly two-thirds of the market.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.
