We recently published a list of Top 10 Stocks Everyone Is Talking About These Days. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other top stocks everyone is talking about these days.

Major AI stocks are wavering as investors assess the impact of decreasing hardware costs and their effects on technology spending. T. Rowe Price’s Tony Wang said in a latest program on CNBC that while Mag. 7 companies are still strong, there are opportunities to look elsewhere as the technology-related gains broaden out.

“You saw the Mag. 7 really dominate the last two years, and I think going into this year, I think that there’s a lot of concern over the capex that’s being spent. I mean, they’re kind of becoming fundamentally different businesses in some respect in terms of the capital intensity. And then on top of that, you had kind of more inline reports, and so when you’re spending a lot of capex and you’re coming in line, I think that tends to set up for a tougher stock reaction. And so, you know, I think there’s other areas in tech that naturally things will broaden out to, like things that have more bottoming fundamentals and can have a little bit easier setup. So I think that, you know, we’re looking for more broadening, and I think that these are still very good companies and still like a core part of tech portfolios, but I think there’s opportunity elsewhere as well.”

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In

For this article, we picked 10 stocks currently trending on latest news and analyst ratings. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A customer entering an internet retail store, illustrating the convenience of online shopping.

Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Funds Investors: 286

Joshua Ketter from Spreetail recently said while talking to Schwab Network that Amazon.com, Inc. (NASDAQ:AMZN) smart home devices are still not up to consumer expectations and it will take time for the company to catch up.

“Amazon, to a certain extent, they’re kind of a victim of their own success. They’ve set a very high bar and have very high expectations with consumers, and I personally believe that they’re not going to quite get there with this release. I think over the course of time they’ll get there. They really do have a right to win in this space, though. To your point, I have over 50 devices in my house—Amazon Alexa connects all of those, but it doesn’t do a good job at understanding which ones I actually wanted to turn on or off unless I’ve named it just right. And so that kind of nuance in language is really important, and you see that ChatGPT has made tremendous strides in that area. However, if I look at some of Amazon’s own current AI models, they’re not quite there. They’re about a year behind, and so I do think they’ll get there eventually, but if they’re using their current AI capabilities, I do think it’s going to be limited. And again, I think the challenge is going to be the consumer is going to have the expectations that this is another kind of Tony Stark Jarvis-type thing or a Star Trek Central Computer, and that they’ll be able to do anything, right? And the moment you start asking questions and it fails, I think it can be challenging for Amazon to meet consumers’ expectations.”

Despite weak guidance, Amazon could easily surpass $100 billion in operating income within the next two years because of its AWS growth engine. In the latest quarter, Amazon Web Services sales jumped 19% and operating profit for the segment jumped 62% in 2024 on an annual basis.

The market is currently forecasting $6.27 per share in profits this year (a 13% YoY growth) and $7.59 per share next year (a 21% YoY growth). Amazon’s stock is priced at a profit multiple of 30.2x. This valuation might look rich, but when we incorporate AWS growth, the stock seems to have more upside potential.

Mar Vista Global Quality Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:

“Amazon.com, Inc.’s (NASDAQ:AMZN) profitability was the key highlight of the third quarter financial results, with AWS and International Retail achieving record operating margins, and North America Retail posting its second-best margin in five years. Even more impressive was the fourth quarter operating income forecast, projecting up to $20 billion, significantly exceeding the expected $16 billion and suggesting a record 11% margin. This exceptional performance was driven by economies of scale, logistics efficiencies, successful AI implementations, increasing ad revenue, and accelerated AWS growth.

We keep our investment in Amazon due to several factors: AWS growth has further potential, Amazon Prime Video monetization is in its initial stages, and the company is expanding into promising sectors like Pharmacy and Logistics. Furthermore, with strengthening profitability and cash reserves exceeding $100 billion, the possibility of substantial capital returns increases. By continuing to innovate and invest in technologies like AI and cloud computing, Amazon is well-positioned to keep its competitive edge.”

Overall, AMZN ranks 1st on our list of top stocks everyone is talking about these days. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that under the radar 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.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

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