After an astronomical rise, investors are unsure about what to do with Nvidia stock. There are reasons it could continue to soar but also reasons why it might be taking a break.

However, there's a different stock that most investors agree about buying right now: Amazon (NASDAQ: AMZN). This artificial intelligence (AI) powerhouse just keeps getting better, and billionaires are scooping it up.

Be like billionaires

Some of the most prominent billionaires have been buying Amazon stock. Ray Dalio of Bridgewater Associates increased his position by almost 1.6 million shares, or 153%, in the second quarter. Ken Griffin of Citadel Advisors bought more than a million shares for a total of nearly 7.7 million. That's a 17% increase.

I often remind investors that, alas, unless you are a billionaire hedge fund manager too, your portfolio makeup and decisions are going to look different from those of the ultra-rich. But Amazon is a stock that could appeal to almost any type of investor.

Amazon is for everyone

Amazon has a bit of everything. It's a tech stock, but it's focused on retail. It offers the newness of AI but the value of an established industry giant. It is growing, but it's also highly profitable. That's why it could belong in all types of portfolios and has even ended up in value investor Warren Buffett's Berkshire Hathaway portfolio.

Amazon has a dominant lead in two fast-growing categories: e-commerce and cloud computing. It accounts for more than a third of all e-commerce sales in the U.S. That's an astounding market share lead that is almost unmatched in any industry.

It continues to invest in the e-commerce business with upgrades and deals. One of its newer and highest-growth areas is Buy With Prime, a service for third-party vendors to offer Amazon-supported Prime checkout on their direct-to-consumer websites. Buy With Prime sales are up 45% so far this year, and vendors have seen average revenue per shopper go up 16% when offering Buy With Prime. It keeps onboarding new merchants who see the benefits. The number of merchants offering it on their websites in 2024 has increased 25% year over year.

One merchant pointed out that seeing the Buy With Prime button creates a higher level of trust when shoppers encounter a small business, and using Amazon's unrivaled logistics network in the U.S. creates more opportunities for these businesses. Amazon's trusted brand means a lot to both merchants and customers, and Amazon is leveraging that trust and brand to generate higher sales.

It's also combining this effort with its advertising business, which is its fastest-growing segment. Merchants using the Buy With Prime service have the ability to advertise in third-party spaces through Amazon's platform, leveraging its pinpointed data to draw customers looking for their products to their direct-to-consumer websites. Amazon gets a cut of both the advertising revenue and the sale, and more than 80% of merchants using the service have said they have met or surpassed their return-on-investments goals.

Last week, Amazon announced a new deal with PayPal Holdings to offer it as a checkout option for Buy With Prime. The impact was felt as a jump in PayPal's stock, but it could also boost Amazon's sales.

Amazon stock also rose last week, but it was more likely as a reaction to lowered federal interest rates. That should generate heightened economic activity, and Amazon is well positioned, perhaps more than any other retailer, to benefit from that.

AI is for cloud developers

AI is really for everyone, but the generative AI solutions that have captivated investor attention are geared toward Amazon's cloud customers through its Amazon Web Services (AWS) cloud-computing business. Amazon is going all out to stay in the AI race and pull ahead of its competitors. It has launched a slew of products, services, features, and upgrades to target every demographic of clients, from microbusinesses through enterprise giants, at every price point and need. Over the past two weeks, it announced a fresh round of deals with NXP Semiconductors, Oracle, and Intel in addition to new clients and rollouts.

AWS had been reliable for high growth, typically topping 30%, before the recent bout of high inflation. The division's growth rate fell to very low double digits, but accelerated again in 2024's Q2 to nearly 18%. Either way, it's still largely responsible for Amazon's operating income, increasing its share to 63% of that metric in the second quarter.

Although the AI business is already large and robust, it's still in its infancy. Technology is only going to heat up and get better, and Amazon should stay on top.

Amazon stock is climbing

Amazon stock had been trading with a 4-digit price tag before it split in 2021, but it now trades at a less intimidating 3-digit price. It's also trading close to its lowest price-to-earnings (P/E) ratio in years, making it even more accessible to any kind of investor.

It's up 26% this year, and investors should feel comfortable following billionaires into a position in Amazon stock.

Should you invest $1,000 in Amazon right now?

Before you buy stock in Amazon, consider this:

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, Nvidia, Oracle, and PayPal. The Motley Fool recommends Intel and NXP Semiconductors and recommends the following options: short November 2024 $24 calls on Intel and short September 2024 $62.50 calls on PayPal. The Motley Fool has a disclosure policy.

Forget Nvidia: Billionaires Are Buying Up This Artificial Intelligence (AI) Stock Instead was originally published by The Motley Fool