We recently published a list of the 11 Most Promising Stocks According to Analysts. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other promising stocks.
On April 23, Stephen Parker, JPMorgan Private Bank co-head of global investment strategy, joined ‘Squawk Box’ on CNBC to express that investors should have a normal level of risk in their portfolios right now. Parker explained that while he is fully in support of remaining invested in the market, he does recommend clients to stay focused on sectors that may be more resilient in a downturn to help protect against losses while staying long. His baseline guidance is for clients to maintain a normal level of risk in their portfolios. Those holding too much cash should get invested, and those overexposed to US markets and the dollar should consider adding non-US exposure. He advised that this is a period where investors must be comfortable with discomfort, as policy uncertainty broadens the range of possible outcomes.
Parker acknowledged that while downside risks are top of mind for many investors, there is also upside potential, especially if there are positive policy surprises, such as clarity on tariffs, which could drive markets back to their highs sooner than expected. His outlook for the S&P 500 index is a wide range, with the high end being flat for the year and a possible range of 5,700-6,200. This reflects heightened policy uncertainty and difficulty in pinpointing a single target. Parker pointed out that even if it takes two years for markets to return to all-time highs, an 8% annual return would still be compelling for equities. Reflecting on the start of the year, he noted that market multiples were considered rich following 2 consecutive years of 20%+ gains. There was optimism around deregulation and changes to corporate taxes, but few expected the S&P 500 to remain flat for 2 years from a level of 6,200. Parker further explained that even without pro-business policy changes, the market may have faced challenges after such strong recent gains. The pullback in high-performing segments of the US market has brought valuations closer to what he considers normal levels, which also sets the stage for potential upside.
Our Methodology
We sifted through the Finviz stock screener to compile a list of the top stocks that had high analysts’ upside potential (at least 35%). The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.
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. (NASDAQ:AMZN) the Most Promising Stock According to Analysts?
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN) provides consumer products, advertising, and subscription services through online and physical stores internationally. It operates through three segments: North America, International, and Amazon Web Services. It offers its products through its stores. These include merchandise and content purchased for resale, and products offered by third-party sellers.
Amazon (NASDAQ:AMZN) recently unveiled its new AI model, called Nova Act. This is the company’s software development kit that takes actions in a web browser on the user’s behalf to automate routine tasks, such as filling forms or extracting data without human intervention. On April 22, Goldman Sachs reiterated the stock’s rating as Buy due to its secular growth themes across Consumer Internet and Cloud Computing. However, the firm lowered its price target to $220 from $255.
The company’s customers are moving to the cloud to use AI. Amazon’s own AI chips, Tranium 2, are 30% to 40% cheaper than its competitors, which helps it attract big clients like Anthropic. Amazon Bedrock is one of the company’s key AI services, which offers various AI models. Amazon Q, which is an AI assistant, is saving companies time and money and showcases practical AI use. AWS is heavily investing in data centers for AI and expects similar spending in 2025.
Harding Loevner Global Developed Markets Equity Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“During the quarter, we benefited from strong stocks within the Communication Services and Consumer Discretionary sectors. In Consumer Discretionary, Amazon.com, Inc. (NASDAQ:AMZN) reported strong third-quarter results. Revenue increased by double digits, led by growth in advertising and Al products, while the company’s operating margins also hit an all-time high of 11%. The key reasons for the higher margins were that its international e-commerce operations turned profitable, and there was faster growth in its high-margin cloud-computing business.”
Overall, AMZN ranks 7th on our list of the most promising stocks according to analysts. While we acknowledge the growth potential of AMZN, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.
