The Rise of AI Stocks: Amazon and Its Role in Phase 2 of the AI Revolution

In the dynamic world of Artificial Intelligence (AI), Amazon ranks 22nd on the list of the best Phase-2 AI stocks by the renowned investment bank Goldman Sachs. Although technology companies experienced significant share price increases after the pandemic, major tech stocks maintain their performance even with high interest rates, as they are considered leading innovators in the AI industry. Interestingly, a significant portion of market-related AI returns is attributable to just one particular stock company. Its stock value has risen an astonishing 1,100% since October 2022, impressively highlighting the transformative power of AI. This technology can change several industries and could support Sam Altman's plans by providing energy and infrastructure to establish large AI data centers in the U.S. Goldman Sachs' analysis categorizes the AI sector into four groups. It includes Wall Street favorites, capacity providers such as server firms and utilities, companies that sell AI products, and companies that will benefit from AI adoption. Particularly, utility companies stood out with outstanding returns, partly due to significant investments in data centers in the U.S. An estimate by the Boston Consulting Group predicts that by 2030, AI will account for 16% of American energy demand. This positive sentiment is also reflected in revenue forecasts: the revenues predicted by Goldman Sachs for chip manufacturers and software companies far surpass 2019 levels. Amazon positions itself in this market environment as a versatile player with a strong presence in both e-commerce and cloud computing. Thanks to a partnership with Anthropic, a company founded by former OpenAI employees, Amazon has a significant foundation for AI applications. This not only enables the company to enhance its e-commerce but also to take a leading role in providing generative AI for various applications. While Patient Capital Management names Amazon as a top favorite for Phase-2 AI stocks due to its enormous potential in its Q2 2024 letter, they remain convinced that other AI stocks may offer even higher returns in a shorter period.