Last month, the top mutual funds made a significant bet on Nvidia (NVDA), with an investment totaling more than $1.6 billion. However, this month, Amazon.com (AMZN) stole the spotlight as the latest AI Wall Street favorite. Leading money managers acquired a staggering $16.2 billion worth of Amazon stock — ten times the amount they invested in Nvidia in October.
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Amazon has also secured a place on the IBD Breakout Stocks Index, along with fellow members of the Magnificent Seven stocks which include Microsoft (MSFT) and Apple (AAPL).
The artificial intelligence boom has driven the success of these tech giants, as well as Alphabet (GOOGL) and Meta Platforms (META), and has significantly impacted Nvidia’s stock.
Amazon has played a major role in machine learning, large language models (LLM), and other AI technologies, and is now poised to leverage its own AI model, code-named Olympus, as reported by Barron’s.
Furthermore, Amazon is expanding the use of generative AI across its AWS cloud services business to drive productivity and accelerate innovation.
Discover the Latest Additions to the IBD Breakout Stocks Index
New Collaborations: Amazon, Meta, and Snap
Two titans of the Magnificent Seven, Meta and Amazon, have joined forces to initiate a partnership that revolves around a new feature allowing users to connect their Facebook and Instagram accounts, both Meta Platforms properties, to their Amazon accounts.
The collaboration will enable Facebook and Instagram users to make purchases by simply clicking on promotions in their feeds.
In addition, Amazon has reportedly formed a partnership with Snapchat parent company Snap (SNAP). Similar to the Amazon-Meta tie-up, the Amazon-Snap partnership will enable Snap users to purchase Amazon products advertised on Snapchat directly through the app.
Impressive Growth and Forecasts for Amazon
On October 26, Amazon reported second-quarter earnings of 94 cents per share, marking a remarkable 236% year-over-year increase. Sales grew by 13% to reach $143.1 billion, reflecting accelerated growth for a second consecutive quarter.
These optimistic signs have propelled Amazon’s Composite Rating to 87, indicating that it is surpassing 87% of all stocks in both fundamental and technical performance.
Analysts anticipate this turnaround to persist, with expectations of Amazon delivering a 2,964% growth in EPS for Q3, leading to an incredible 4,594% earnings increase for the full year. Projections for 2024 indicate a 39% earnings growth.
With an 86 Composite Rating, Amazon is slightly behind Apple and Tesla (TSLA). In contrast, Nvidia, Microsoft, and Meta boast the highest-possible 99 Composite Rating, while Google stock holds a strong 97.
Continued Uptrend in Amazon Stock
In late October, Amazon stock surpassed a 134.48 buy point in a double bottom. Since then, the AI cloud leader continues to soar, demonstrating market leadership as its relative strength line reaches a 52-week high. Although it experienced a slight retreat, Amazon’s fellow Magnificent Seven stocks, including Microsoft, Meta, Nvidia, and Apple, also exhibit significant strength amid a trending Santa Claus rally. Similarly, Google stock and Tesla have rebounded and currently trade near or just above their 10-week moving averages.
IBD Breakout Opportunities ETF
The IBD Breakout Opportunities ETF (BOUT) from Innovator Capital Management tracks the IBD Breakout Stocks Index. This fund provides the opportunity to invest in the entire index and gain exposure to multiple stocks as part of a single investment. Learn more here about the ETF and Innovator.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
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