From Nasdaq: 2024-04-14 07:00:00

The stock market is excited about artificial intelligence (AI) with indexes near record levels. The “Magnificent Seven” includes Microsoft, Alphabet, Nvidia, Apple, Meta Platforms, Tesla, and Amazon. Amazon’s stock price target was raised to $215 by Morgan Stanley, suggesting 15% upside potential. Amazon has rebounded with $36.8 billion in free cash flow in 2023.

In 2023, Amazon faced challenges from inflation and rising interest rates impacting consumer spending. However, the company adapted to the economic environment and saw growth accelerate with $36.8 billion in free cash flow. Amazon’s profitability improved as its e-commerce, cloud computing, and advertising segments contributed to strong cash flow generation.

Amazon invested in artificial intelligence (AI) through partnerships with companies like Anthropic. The collaboration will utilize AWS services and develop AI models using Amazon’s Trainium and Inferentia chips. Amazon’s current P/S ratio of 3.4 is the lowest among the Magnificent Seven stocks, with potential for exponential growth from AI applications across its business ecosystem.

Investors looking for exposure to AI should consider Amazon with its discounted valuation relative to peers. The company’s diverse business segments present multiple opportunities for AI integration, potentially leading to significant revenue and profit growth. As AI continues to drive innovation, Amazon’s position within the landscape remains compelling for long-term investment.



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