Amazon Sharpens Competitive Position Through Acquisition in AI Sector

Amazon.com, founded in 1994, has developed into one of the most diversified e-commerce and cloud computing companies worldwide. The company's operations can be divided into three main segments: online retail, physical stores, and Amazon Web Services (AWS). Amazon’s revenue sources include online stores, physical stores, third-party services, subscriptions, and AWS. The online retail platform offers a wide range of products, including books, electronics, clothing, and household appliances. Additionally, Amazon operates physical stores such as Whole Foods Market, Amazon Books, and Amazon Go. AWS, Amazon’s cloud computing business, serves various business customers, startups, and government agencies. Through its e-retail and physical stores, Amazon serves a wide variety of consumers globally. AWS generates revenue from a broad range of customers around the world. Subscription services, such as Amazon Prime, are targeted at consumers who value convenience and special privileges. A significant growth driver for Amazon lies in its AI investments. Recently, the company acquired Anthropic, a direct competitor to OpenAI, for $4 billion. Amazon already offers users access to foundational models for their own AI applications through its Bedrock platform. The integration of Anthropic makes the platform even more attractive and could potentially generate a larger user base that Amazon can monetize in the future. Thanks to its strong market position in cloud computing through AWS, Amazon already holds a significant lead in the AI field. By leveraging AWS resources, Amazon can maximize the capabilities of Anthropic and establish itself as a key player in the AI sector. The partnership with Anthropic is still in its early stages. However, if successful, it could lead to significant returns for Amazon. The acquisition price of $4 billion could pale in comparison to the potential revenue from generative AI. This positions Amazon as a leading candidate to benefit from growth dynamics in the AI field, while also providing the security of a stable and strong business, making it favored by hedge funds. Amazon currently leads our list of the 31 most popular stocks among hedge funds. In our database, 308 hedge fund portfolios held AMZN at the end of the second quarter, up from 302 in the previous quarter. While we recognize AMZN’s potential as a leading AI investment, we believe that some AI stocks promise higher returns in a shorter timeframe. If you are looking for a promising AI stock trading at less than five times its earnings, take a look at our report on the most affordable AI stock.