We recently compiled a list of the Top 10 Stocks to Buy According to Lone Pine Capital.In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against the other stocks.
Lone Pine Capital, established in 1997 by Stephen Mandel, is a leading hedge fund and investment advisory firm based in Greenwich, Connecticut. The firm also operates offices in major financial hubs, including London, New York City, and San Francisco. Over the years, Lone Pine Capital has built a strong reputation in the investment world, focusing on long-term growth strategies. The firm’s disciplined approach to stock selection and asset management has enabled it to maintain a significant presence in the hedge fund industry.
Stephen Mandel, the founder of the firm, has had an extensive career in finance even before launching Lone Pine Capital. He previously worked as a managing director at Tiger Management, gaining valuable experience in investment strategy. A graduate of Dartmouth College with a degree in government, Mandel later earned an MBA from Harvard University. His expertise and leadership led to his ranking in the highest-earning categories among Forbes’ top hedge fund managers multiple times between 2012 and 2018. Although Mandel stepped away from active investment management in 2019, he continues to serve as a managing director at the firm. As of Q4 2024, Lone Pine Capital managed nearly $13.5 billion in 13F securities spread across 30 companies, with its top 10 holdings accounting for 55.89% of its portfolio.
Lone Pine Capital’s investment philosophy is rooted in identifying transformative changes that can unlock or accelerate value. By leveraging institutional knowledge and deep expertise across sectors and global markets, the firm continuously reassesses its investment theses and uncovers new opportunities. It strategically times market entry by recognizing key turning points in economic and industry cycles, allowing it to capitalize on shifts before they become widely apparent. The firm also prioritizes long-term value creation, typically holding investments for two to three years, though it has held stocks of certain companies for decades. This disciplined approach aligns investment timelines with investor expectations, optimizing returns. Additionally, Lone Pine Capital remains highly responsive to innovation in various forms—whether through technological advancements, business model evolution, or leadership changes—adapting its strategies based on emerging data and shifting market dynamics.
Moreover, the hedge fund's investment strategies are designed to achieve long-term capital appreciation through a disciplined and research-driven approach. For its long-only strategy, the firm focuses on high-conviction investments in companies with strong growth potential, maintaining a diversified portfolio primarily across North America and Europe while limiting exposure to emerging markets. Its long/short equity strategy follows a similar approach, combining concentrated long positions with a diversified selection of short investments to navigate market fluctuations effectively. Net exposure varies based on market conditions and available opportunities, ensuring flexibility in positioning. In private investments, the firm applies its extensive research capabilities to identify promising companies in sectors such as software, financial technology, healthcare, and consumer markets. By targeting capital-efficient businesses with significant public market potential, Lone Pine Capital seeks to maximize returns through selective, high-impact investments.
Our Methodology
The stocks discussed below were picked from Lone Pine Capital’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1008 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
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).
Is Amazon.com, Inc. (AMZN) the Best Magic Formula Stock for 2025?
A customer entering an internet retail store, illustrating the convenience of online shopping.
As of Q4 2024, Lone Pine Capital held 3.79 million shares of Amazon.com, Inc. (NASDAQ:AMZN), valued at over $831 million. Hedge fund interest in the company also increased, with 339 funds tracked by Insider Monkey holding positions worth nearly $69.04 billion by the end of the quarter, up from 286 funds in Q3.
As of February 24, 2025, Amazon.com, Inc. (NASDAQ:AMZN) traded at approximately $216.58 per share, reflecting market fluctuations. Despite a strong market capitalization of $2.23 trillion, the stock dipped nearly 3% to a low of $214.74, its lowest since early December. The decline followed Amazon’s Q4 2024 earnings report, which, despite exceeding expectations with earnings per share (EPS) of $1.86 and revenue of $187.8 billion (a 10% year-over-year increase), disappointed investors with a Q1 2025 sales forecast of $151 billion to $155.5 billion, below Wall Street’s $158.5 billion estimate. Additionally, concerns arose over Amazon.com, Inc. (NASDAQ:AMZN)’s aggressive $100 billion investment in AWS and AI, an increase from $83 billion in 2024, as well as a $2.1 billion foreign exchange headwind. Heightened competition from Microsoft and Alphabet further contributed to bearish sentiment, despite Amazon’s continued financial strength.
Amazon.com, Inc. (NASDAQ:AMZN)’s long-term growth remains remarkable, with its stock having surged over 226,744% since its 1997 IPO. In Q4 2024, the company’s operating income climbed to $21.2 billion from $13.2 billion the previous year, while net income doubled to $20 billion. AWS played a key role, reporting a 19% rise in quarterly revenue to $28.8 billion. For the full year, the company's net sales increased 11% to $638 billion, with operating income nearly doubling to $68.6 billion and net income reaching $59.2 billion. Despite a 44% stock surge in 2024—outpacing the market's 23% gain—early 2025 has seen increased volatility due to conservative forward guidance. However, Amazon’s financial resilience, dominance in e-commerce and cloud computing, and strategic investments in AI position it well for sustained long-term growth.
“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.
Overall AMZN ranks 2nd on our list of the stocks to buy according to Lone Pine Capital. While we acknowledge the potential for AMZN as an investment, our conviction lies in the belief that some 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.
