Is Amazon.com (AMZN) One of the Best Big Name Stocks to Invest in Now?
We recently compiled a list of the 12 Best Big Name Stocks to Invest in Now.In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other best big name stocks to invest in now.
Big name stocks refer to well-known companies that are widely recognized and have a significant presence in the stock market. These companies are often industry leaders and are included in major stock indices such as the S&P 500, Dow Jones Industrial Average, or Nasdaq Composite. These companies are characterized by their large market capitalizations, stable financial performance, and strong brand recognition.
In an interview on January 22, Dave Sekera, US Market Strategist at Morningstar, provided a detailed outlook for large-cap stocks in 2025. Sekera highlighted that the performance of large-cap stocks in 2024 was particularly strong, driven by several key factors. The explosive demand for artificial intelligence (AI) hardware and platforms, especially in the first half of 2024, significantly boosted the performance of large-cap tech stocks. Additionally, the US economy remained resilient, with faster-than-expected growth, which supported the performance of large-cap stocks. The Federal Reserve’s easing of monetary policy also played a crucial role in driving the market higher.
However, Sekera noted that the rate of monetary policy easing is now slowing, and the market is pricing in fewer rate cuts this year than originally projected. This, combined with sticky inflation and a rise in long-term interest rates, suggests that the tailwinds that supported large-cap stocks in 2024 are beginning to recede.
Furthermore, Sekera pointed out that the concentration of market returns in 2024 was notable, with 10 stocks accounting for 58% of the market gain, despite representing only 30% of the market capitalization. This concentration is less than the 67% peak in June 2024, indicating a broadening of returns in the second half of the year. Despite this broadening, many of these large-cap stocks, particularly those tied to AI, are now trading at significant premiums. Sekera advised investors to be cautious, as very few of these large-cap stocks are currently undervalued, with most trading at 2-star or 1-star ratings, indicating they are overvalued.
Big name stocks remain a compelling investment choice, offering stability, strong financial performance, and long-term growth potential.
Is Amazon.com, Inc. (MZN) One of the Best Big Name Stocks to Invest in Now?
A customer entering an internet retail store, illustrating the convenience of online shopping.
To compile our list of the 12 best big name stocks to invest in now, we used Finviz and Yahoo stock screeners to identify well-known, large-cap companies, that have a significant presence in the United States stock market. We then used Insider Monkey’s Hedge Fund database to rank 12 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Number of Hedge Fund Holdings: 286
Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest e-commerce platform and a leader in cloud computing through Amazon Web Services (AWS). The company caters to individual consumers, small businesses, and large enterprises. Amazon.com, Inc.’s (NASDAQ:AMZN) diverse offerings range from online retail and Prime streaming to AWS solutions for businesses.
Amazon.com, Inc. (NASDAQ:AMZN) is enhancing its advertising capabilities with new offerings, including Prime Video advertising and Generative AI-powered creative tools, which are expected to drive future growth. For consumers, the company has launched AI-powered shopping assistants like Rufus, which is now available in multiple countries and provides personalized recommendations and real-time pricing insights. Furthermore, Amazon.com, Inc. (NASDAQ:AMZN) is upgrading Alexa with new foundational AI models and incorporating artificial intelligence into its devices, including the latest Kindle Scribe. In Amazon Web Services (AWS), the company has maintained a competitive edge by introducing nearly twice as many machine learning and Generative AI features as its competitors in the past 18 months.
Amazon.com, Inc. (NASDAQ:AMZN) is also focusing on enhancing customer experience and improving operational efficiency. Within its retail segment, the company has introduced initiatives such as unlimited grocery delivery from Whole Foods Market, Amazon Fresh, and other grocery partners for $9.99 per month, alongside fuel discounts of $0.10 per gallon at select U.S. stations. To further streamline delivery times and reduce costs, Amazon.com, Inc. (NASDAQ:AMZN) has restructured its fulfillment network to enable more efficient distribution of inventory across regional centers.
Overall, AMZN ranks 1st on our list of the best big name stocks to invest in now. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
