Is Amazon.com Inc (AMZN) the Best Growth Stock To Buy According To George Soros?
We recently compiled a list of the 10 Best Growth Stocks To Buy According To George Soros. In this article, we will look at where Amazon.com Inc (NASDAQ:AMZN) ranks among the 10 best growth stocks to buy according to George Soros.
The Man Who Broke the Bank of England
George Soros, the owner of Soros Fund Management, is known as one of the most controversial investors in the history of investing. The now 94-year-old, “broke the Bank of England” after he reportedly made $1 billion from shorting the British pound in 1992. As of September 19, Soros has a net worth of $7.2 billion. He managed client money in New York from 1969 to 2011.
Soros Fund Management was founded in 1970 and manages almost $28 billion in net assets at the moment. The fund is the principal asset manager for Soros’ philanthropic venture, the Open Society Foundations (OSF). So far he has given away more than $32 billion of his fortune to the OSF. Last year, Soros handed over the fund to his eldest son, Alexander Soros, who now aims to take his philanthropic endeavors to another level.
George Soros’ Investment Philosophy
Soros is known for being ahead of the market. Historically, he has made financial decisions after gauging market feedback and predicting market activities, that have returned or saved him millions, if not billions. This is what he calls the “reflexivity” theory. By applying this theory to finance and investments, Soros values assets based on market feedback, predicts market bubbles, and exploits market opportunities. A recent example of this was when Soros pulled out a staggering $73 million from two major technology players right before the tech downturn in mid-July.
Soros also uses another method, which he calls the Soros’ Method, to forecast events in the financial markets using current data. He then tests his theories on small investments and if the theory seems to be working out, he expands his position or size of his investment. This, however, does not mean that Soros has never failed or encountered risk during his time as an investor. He has made multiple expensive decisions from which he learned lessons and has even quoted them in his books. Here is an excerpt of what he said in his book, Soros on Soros: Staying Ahead of the Curve:
“The prevailing wisdom is that markets are always right. I take the opposition position. I assume that markets are always wrong. Even if my assumption is occasionally wrong, I use it as a working hypothesis. It does not follow that one should always go against the prevailing trend. On the contrary, most of the time the trend prevails; only occasionally are the errors corrected. It is only on those occasions that one should go against the trend. This line of reasoning leads me to look for the flaw in every investment thesis. … I am ahead of the curve. I watch out for telltale signs that a trend may be exhausted. Then I disengage from the herd and look for a different investment thesis. Or, if I think the trend has been carried to excess, I may probe going against it. Most of the time we are punished if we go against the trend. Only at an inflection point are we rewarded.”
One can say that Soros’ degree in philosophy helped him carve his way into the financial markets. Now that we have studied Soros’ investment philosophy, let’s take a look at the 10 best growth stocks according to George Soros.
Our Methodology
To come up with the 10 best growth stocks according to George Soros, we examined his 13F portfolio and selected his top 10 growth stock picks, as of Q2 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Amazon.com Inc (NASDAQ:AMZN)
Soros Fund Management’s Stake Value: $56.21 Million
Number of Hedge Fund Holders: 308
Amazon.com Inc (NASDAQ:AMZN) is a technology company that specializes in e-commerce, online retail, streaming, and data cloud services. Its e-commerce platform is functional in 20 countries and ships to over 100 countries. Its proprietary cloud service, Amazon Web Services, on the other hand, is used by millions of active customers and has over 130,000 AWS partners across 200 countries.
The company was first launched in 1994 and is on track to capture over 40% of the e-commerce market in the United States. As for its cloud segment, Amazon Web Services (AWS) increased its revenue by 17.2%, year-over-year in Q1 to 18.8% in Q2. AWS has logged 30% plus operating margins consistently for the past five quarters, making it a star performer.
Amazon.com Inc (NASDAQ:AMZN) is also making strides on the AI front. Over the past few months, the company has partnered with AI startups like Anthropic and signed deals with the US government to test new AI models. As for AI hardware, the company has produced several AI chips to reduce its dependence on other companies.
Amazon’s growth is undeniable which explains its position in Soros’s portfolio. Analysts are bullish on AMZN and their 12-month median price target of $220 points to a 16% upside from current levels. Overall, AMZN was held by 308 hedge funds and Fisher Asset Management was the largest shareholder.
Diamond Hill Select Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Among our top individual contributors in Q2 were Amazon.com, Inc. (NASDAQ:AMZN), Texas Instruments and Mr. Cooper Group. Internet retail and cloud infrastructure company Amazon is benefiting from strong profitability, particularly in its Amazon Web Services (AWS) business. Shares also received a boost amid growing optimism around the demand for AWS as Amazon customers’ investments in generative AI projects continue growing.”
Overall AMZN ranks 7th on our list of the best growth stocks to buy according to George Soros. 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 timeframe. 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.
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Disclosure: None. This article was originally published on Insider Monkey.