4 hours Ago By [email protected] (Trevor Jennewine)
Among Wall Street analysts that follow Amazon ( AMZN 2.50% ) , 95% currently rate the stock a buy, and the remaining 5% rate the stock a hold. Not a single analyst recommends selling Amazon stock at the present time, according to FactSet Research .
Microsoft is the only other company in the S&P 500 ( ^GSPC 0.90% ) with the same percentage of buy ratings, but 2% of analysts recommend selling the stock, which lowers its net score by two points. Nvidia is also near the top, with 94% of analysts rating the stock a buy and the remaining 6% rating the stock a hold.
In short, while Microsoft and Nvidia are close contenders, Amazon is the best artificial intelligence (AI) stock in the S&P 500 to buy now, if "best" is defined as the stock with the highest net percentage of buy ratings. Here's what investors should know. Amazon is putting AI to work across its three business segments Amazon has a strong competitive position in three big markets: e-commerce, digital advertising, and cloud computing.
And the company is using artificial intelligence (AI) to boost revenue and improve efficiency across all three business segments. Amazon runs the largest e-commerce marketplace in North America and Western Europe in terms of sales, and Morgan Stanley analysts expect it to be the largest in the world by 2028. Faster delivery times should contribute to market share gains, while the broader shift toward online shopping should afford the company more pricing power over time, according to analysts.
One corollary of its dominance in retail is a highly engaged consumer base and rich data. That combination has helped Amazon become the largest retail advertiser and the third-largest adtech company in the world. Its market share is expected to reach 9.
4% in 2025, up almost two points from 2023, according to eMarketer. Finally, Amazon Web Services (AWS) is the largest public cloud, as measured by its market share of 40%. In that context, AWS is uniquely positioned to benefit as demand for AI infrastructure and platform services spurs greater cloud spending.
AWS has leaned into the opportunity by designing custom chips for AI training and inference, and introducing a generative AI development platform called Bedrock . Amazon is also monetizing AI in more subtle ways. For instance, shoppers spend $443,000 per minute on the marketplace.
Transactions generate data that not only informs the machine learning models that power its adtech software, but also its generative AI shopping assistant Rufus. Beyond that, Morgan Stanley says AI-driven supply chain optimization could boost its operating margin by 4 percentage points. Amazon looked strong in the second quarter Amazon reported solid financial results in the second quarter.
Revenue increased 10% to $148 billion on strong momentum in advertising and cloud computing, and generally accepted accounting principles ( GAAP ) net income soared 94% to $1.26 per diluted share . But Amazon missed revenue estimates and management gave conservative guidance, so the stock fell about 10% following the report.
On the bright side, CFO Brian Olsavsky told analysts Amazon achieved its fastest delivery speeds for Prime members this year, which has strengthened its position in everyday essentials. In turn, Prime members are shopping more frequently and spending more money, meaning Amazon is further entrenching itself as an e-commerce leader. Additionally, CEO Andy Jassy said, "Our AI business continues to grow dramatically with a multibillion-dollar revenue run rate despite it being such early days.
" He also told analysts Bedrock has the largest selection of models and the best generative AI capabilities in areas like model evaluation, information retrieval, and AI agent development. Amazon's share price is fair, but it's not the only AI stock worth buying Amazon stock has mostly recovered from its post-earnings dip, but shares still trade at an attractive price in context. Wall Street expects Amazon's earning to grow at 22% annually over the next three years.
That makes the current valuation of 43.5 times earnings look reasonable. Investors should feel confident in buying a small position in this AI stock today.
As a caveat, while Wall Street analysts are exceedingly bullish on Amazon -- more so than any other stock in the S&P 500, based on the net percentage of buy ratings -- the most prudent way to benefit from AI is to build a basket of quality stocks. Amazon is just one component of that basket. Investors should never limit themselves to a single AI stock .
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