Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The U.S. equities have experienced a significant performance surge over the past two years. In the fourth quarter, the strategy returned 4.9% (gross) and 4.65% (net) compared to 7.07% for the Russell 1000 Growth Index and 2.41% for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2024.

In its fourth quarter 2024 investor letter, Polen Focus Growth Strategy emphasized stocks such as Amazon.com, Inc. (NASDAQ:AMZN). Amazon.com, Inc. (NASDAQ:AMZN) provides consumer products, advertising, and subscription services through online and physical stores that operate through North America, International, and Amazon Web Services (AWS) segments. The one-month return of Amazon.com, Inc. (NASDAQ:AMZN) was -12.76%, and its shares gained 17.84% of their value over the last 52 weeks. On March 5, 2025, Amazon.com, Inc. (NASDAQ:AMZN) stock closed at $208.36 per share with a market capitalization of $2.21 trillion.

Polen Focus Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:

"Consistent with our thesis, Amazon.com, Inc. (NASDAQ:AMZN) has continued to see operating margins expand, hitting 11% in the most recent quarter after bottoming around 2% at the end of 2022. This march higher in margins stems from a mix shift towards faster-growing, higher-margin segments like Amazon Web Services (AWS) and Advertising, combined with better fulfillment efficiency in the e commerce business following significant investments in recent years. Further, speaking to its runway ahead, CEO Andy Jassy noted the company's AI business is a “multi-billion-dollar business growing triple digits,” 3x faster than AWS did itself at the same stage in its evolution. While we trimmed our position during the quarter, Amazon remains our largest position, as we expect approximately 20% earnings growth over the next five years driven by a mix of solid organic revenue growth and continued margin expansion.

We trimmed our positions in UnitedHealth Group, Amazon, ServiceNow, and Gartner during the quarter. Amazon continues to deliver excellent results with all businesses growing robustly and profit margins expanding. When we significantly increased Amazon’s weighting in the portfolio about two years ago, its operating margins were at 2%, and we anticipated they would expand to the mid-teens over the next few years. Today, they stand at 11%, and we expect them to expand closer to the high-teen level in the next few years. The earnings growth potential from here is roughly 20% per annum based on our expectation for revenue and profit margin expansion. While this still represents excellent potential and Amazon remains our largest position, we no longer feel it merits a maximum position size."

Amazon.com, Inc. (NASDAQ:AMZN) is in first position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 339 hedge fund portfolios held Amazon.com, Inc. (NASDAQ:AMZN) at the end of the fourth quarter compared to 286 in the third quarter. In Q4 2024, Amazon.com, Inc. (NASDAQ:AMZN) achieved global revenue of $187.8 billion, representing an 11% year-over-year growth excluding the impact of foreign exchange. While we acknowledge the potential of Amazon.com, Inc. (NASDAQ: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 timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Amazon.com, Inc. (NASDAQ:AMZN) and shared the list of best Warren Buffett stocks to buy. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.