Motley Fool Asset Management’s Top AI Stock Pick: Amazon.com (AMZN)

Motley Fool Asset Management’s Stake: $113.64 Million

AMZN shares are up 45% implicit the past year. But does the banal person much country to run?

Cloud remains the biggest semipermanent catalyst for Amazon. It has a astir 30–32% stock of the planetary unreality infrastructure market, up of Microsoft and Google. The Cloud concern generates operating margins estimated astatine astir 30%, importantly higher than accepted retail margins.

As companies deploy AI applications astatine scale, they request reliable Cloud solutions, and that’s wherever Amazon tin benefit. How? AWS has a beardown moat due to the fact that of the reliability and scalability it provides to ample corporations. It benefits from precocious switching costs and semipermanent contracts, arsenic migrating endeavor systems tin outgo millions and instrumentality years, helping support unchangeable recurring revenue.

AWS ecosystem of services is different beardown concern moat. Unlike Microsoft Azure and Google Cloud, AWS offers 240+ unreality services, allowing companies to build, bid and deploy AI models, store data, tally applications and negociate cybersecurity wrong 1 platform, expanding switching costs and strengthening lawsuit lock-in implicit time.

E-commerce and ads are beardown maturation cardinal catalysts for the stock. Amazon.com Inc (NASDAQ:AMZN) controls astir 40% of U.S. e-commerce, which gives the institution entree to user acquisition data. This creates a goldmine for advertisers to people users, and Amazon.com Inc (NASDAQ:AMZN) is tapping into that opportunity. Amazon’s advertisement conception has been increasing astir 20% annually successful caller years and already generates tens of billions successful yearly revenue, making it 1 of the largest integer advertizing platforms down Google and Meta.

TCW Relative Value Large Cap Fund stated the pursuing regarding Amazon.com, Inc. (NASDAQ:AMZN) successful its fourth 4th 2025 capitalist letter:

“Amazon.com, Inc. (NASDAQ:AMZN) is simply a $2.3 trillion net institution headquartered successful Seattle, WA. The concern catalyst is caller products/markets. AWS has been little impacted by the question of AI spending than its hyperscale peers arsenic they person ...” (Click Here To Read The Letter successful Detail)

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While we admit the imaginable of AMZN arsenic an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you're looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the best short-term AI stock.