Amazon Best Ai Stock

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Amazon Best Ai Stock

Amazon Might Be The Best AI Stock

Amazon shares are trading close to all times high, and the quarterly results continue to beat forecasts. Now, some investors think they have missed the move in Amazon stock.

However, a closer look at Amazon shows the bullish rally may be just getting started! The key growth engines of Amazon are AWS and the custom silicon operation.

AWS Continues To Grow At A Fast Pace

Over the years, AWS has seen massive growth, and it just reached new highs with the arrival of AI. On top of that, the chip business, which was once a side project, has now grown into a big data center semiconductor operation!

If we look at AWS, it becomes clear that the story is just getting started. The Q1 revenue is up by 17% y/y and was recorded at $181.5 billion. What's more impressive is that the revenue growth continues to climb every quarter!

The operating income of Amazon has also jumped from $18.4 billion to around $23.9 billion. Around $14.2 billion of the profit came from AWS, which amounts for 59%.

But the biggest surprise of all is Amazon's custom chips. The annualized run rate of the chip operation has already crossed $20 billion during Q1 with a 40% sequential growth. In addition, the Trainium chip has already secured revenue commitments worth $225 billion.

When we consider all of this, it becomes clear that Amazon is a big player in the AI space. Given its massive size, it is reasonable to assume that more upside is ahead for the Amazon stock price.

If we talk about risks, the biggest one is the capital expenditures, which reached $43.2 billion in Q1. So, if we see a decline in the demand for AWS or custom chips, it would take longer for Amazon to recover the spending.

However, the P/E ratio of Amazon stock is still 32, which is very reasonable for such a big business. And let's not forget the e-commerce businesses of Amazon, which are growing at a double-digit rate.

The bottom line is that Amazon stock is an attractive choice. What's more impressive is that investors don't have to pay a premium to own this AI stock.

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