Investors have been flocking to the “Magnificent Seven” stocks for potential high returns over the past year. Companies like Nvidia, Microsoft, Alphabet, and Meta Platforms have all outperformed the S&P 500 and Nasdaq Composite, largely due to the growing interest in artificial intelligence (AI).
However, despite the success of these companies, Amazon, a member of the Magnificent Seven, has not seen the same level of performance. With shares down about 14% in the last month, now might be a good time to consider buying Amazon stock.
Amazon has been quietly disrupting the AI landscape, particularly in cloud computing. The company faces competition from Microsoft Azure and Alphabet’s Google Cloud Platform, but recent trends in Amazon Web Services (AWS) show positive growth in revenue and operating income.
Moreover, Amazon’s investment in generative AI start-up Anthropic and its data center project in Indiana demonstrate the company’s commitment to AI development. This, along with the strong cash flow from AWS, positions Amazon well for future growth in the AI space.
Amazon’s current valuation, with a price-to-free-cash-flow multiple of 37.1, is lower than its historical average. This, combined with its strong position in the AI market, makes Amazon an attractive investment opportunity among mega-cap tech stocks.
If you’re considering investing in Amazon, it’s worth noting that the Motley Fool Stock Advisor team has identified 10 other stocks with potential for significant returns. However, Amazon’s AI initiatives and financial strength make it a compelling choice for long-term investors.
Overall, Amazon’s growth in AI, strong cash flow, and attractive valuation make it a prime opportunity for investors looking to capitalize on the potential of the AI landscape.
Disclaimer: This rewritten content is based on an article originally published by The Motley Fool. All key points and information have been preserved while ensuring the content seamlessly integrates into a WordPress platform.