Does, Inc. Is (NASDAQ:AMZN) an Overbought AI Stock in 2024?

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We have recently published a list. Top 10 Overbought AI Stocks in 2024. Since, Inc. (NASDAQ:AMZN) tops the list, so it deserves a closer look.

The second half of 2024 is here and with rate cuts from the Federal Reserve, price warnings and AI-led market hype is ramping up. A number of notable Wall Street analysts have recently warned that markets are more concentrated than ever, with only a few stocks driving most of the gains thanks to their dominance in the AI ​​industry. Many also believe that the market is ready for a correction as it has entered overbought territory. The world's fifth-largest exchange-traded fund by assets (AUM), QQQ Trust Series 1, is now overbought based on its relative strength index technical indicators, financial services company BTIG said in a recent report. Trades “well” in the area. QQQ tracks the Nasdaq-100 index and it's not surprising to see the ETF showing signs of overbought as more investors pile into megacap tech stocks to get on board the AI ​​bandwagon.

For this article we scanned the holdings of the Invesco QQQ Trust Series 1 ETF and selected the fund's top technology holdings with high relative strength index (RSI) values. Generally, an RSI value of 60 and above indicates that the stock is overbought. We have also mentioned the number of hedge fund investors with these stocks. Why are we interested in the stocks that hedge funds invest in? 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 strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (See more details here).

Does Inc. Is (NASDAQ:AMZN) an Overbought AI Stock in 2024?

Pixabay/ Public Domain Inc (NASDAQ:AMZN)

Number of hedge fund investors: 302 Inc (NASDAQ:AMZN) is one of QQQ's top holdings, with BTIG believing the RSI has entered overbought territory by value. Inc (NASDAQ:AMZN) has RSI value of 62 as of June 23. The stock is seen as one of the biggest AI plays in the market because of its AWS business.

Investment firm UBS touts Trainium and Inferentia as Inc's (NASDAQ:AMZN) strengths to capitalize on a $1.16 trillion opportunity in the AI ​​enabling layer in a recent report. Trinium is a machine learning (ML) chip purpose-built by AWS for deep learning (DL) training of 100B+ parameter models. Inferentia is an AI accelerator for deep learning (DL) and generative AI inference applications.

Amazon Web Services is another major factor that positions Inc (NASDAQ:AMZN) well in the enablement layer of the AI ​​value chain. However, UBS believes that Inc (NASDAQ:AMZN) has no offering in the intelligence layer of the AI ​​value chain. The firm labeled “chatbot recommendations” as a strength in Inc's (NASDAQ:AMZN) AI application layer. Inc (NASDAQ:AMZN) is becoming an AI powerhouse thanks to its AWS business, which saw operating margins exceed 37% during the first quarter. AWS operating margin has now been over 30% for the last five consecutive quarters. Inc (NASDAQ:AMZN) revenue rose 12.5% ​​YoY in the first quarter and its adjusted EPS more than tripled. Revenues also increased in the North American and International segments. Analysts believe digital advertising is another strong revenue stream for Inc ( NASDAQ:AMZN ), with revenue from the segment growing 24% YoY to $11.8 billion in the first quarter.

Mar Vista Strategic Growth Strategy announced in its first quarter 2024 investor letter that, Inc. (NASDAQ:AMZN) stated the following:

“, Inc. (NASDAQ:AMZN) is experiencing a surge in profitability, reflected by significantly higher retail profit margins. Strategic cost reductions in headcount and fulfillment have translated into financial benefits. While unexpected pandemic-driven demand growth necessitated rapid expansion of fulfillment infrastructure, it initially impacted operating profitability. However, current unit sales growth has effectively reached equilibrium with the capacity to replenish. This balance is leading to positive adjustments in both earnings and intrinsic value estimates. If the economic environment continues to improve, we believe Amazon's investment potential is consistent with its expected 15-20% intrinsic value growth trajectory.

Overall,, Inc. (NASDAQ:AMZN) is number one on Insider Monkey's list. Top 10 Overbought AI Stocks in 2024. While we at, Inc. (NASDAQ:AMZN)'s potential, our belief lies in the belief that AI stocks hold more promise to deliver higher returns, and do so over the short term. If you are looking for an AI stock that, Inc. (NASDAQ:AMZN) is more promising but trades at less than 5 times its earnings, so check out our report on it. Cheapest AI Stocks.

Read next: Analyst Sees New $25 Billion “Opportunity” For NVIDIA And Jim Cramer is recommending this stock..

Disclosure: None. This article was originally published on Insider Monkey.

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