Artificial intelligence (AI) has burst onto the scene in a big way over the past year or so. The forerunners of modern AI have been around since the 1950s, but recent algorithms have taken the technology to the next level. What sets generative AI apart from its predecessors is not only the ability to create completely new and unique content but also to streamline and automate processes, resulting in substantial productivity increases. The potential to save time and money is significant, setting off a mad rush to adopt this ground-breaking technology.
Outspoken JPMorgan Chase CEO Jamie Dimon has never shied away from bold proclamations. In his recent shareholder letter, the enigmatic chief executive said generative AI could be “as transformational as some of the major technological inventions of the past several hundred years: Think the printing press, the steam engine, electricity, computing, and the internet, among others.”
While that might seem a little over the top, a similar chorus is growing among tech aficionados. Even the most conservative estimates suggest generative AI will impact the economy to the tune of $1 trillion or more over the next 10 years. Companies best positioned to ride these secular tailwinds will also reap the resulting windfall, which will ultimately benefit investors.
There will be plenty of stocks that will ultimately benefit from AI, but one I’m particularly excited about is Amazon (NASDAQ: AMZN).
Image source: Getty Images.
An industry leader — in more ways than one
It’s important to consider Amazon’s AI opportunity in the context of its overall business — which is considerable.
The company first rose to prominence thanks to its industry-leading e-commerce business. Amazon has long dominated this industry, accounting for roughly 38% of U.S. online retail sales in 2023, more than its next 15 largest rivals combined, according to data compiled by eMarketer. The company is expected to maintain its dominance in 2024.
Amazon has long used AI to maintain its edge over the competition. These use cases include product recommendations made to its customers, predicting and maintaining the correct inventory levels at its warehouses and distribution centers, using robots powered by AI to stock shelves and ship merchandise, and even determining the most efficient routes for its deliveries.
There’s also the company’s industry-leading cloud computing arm, Amazon Web Services (AWS). While its dominance has faded in recent years in the face of stiff competition, AWS remained the top provider of cloud infrastructure services with 31% of the market to close out 2023, with Microsoft Azure at No. 2 and Alphabet‘s Google Cloud at No. 3, with 26% and 10% of the market respectively, according to research firm Canalys. AI is central to Amazon’s AWS cloud strategy (more on that in a moment).
Finally, there’s Amazon’s digital advertising business, with ads appearing on its e-commerce website, Prime Video and Freevee streaming offerings, game streaming platform Twitch, Amazon Music, and more. The company uses AI to better match ads with their target market. The strategy has been wildly successful, as advertising services was Amazon’s fastest-growing major business segment in 2023.
The big kahuna
Lest there be any doubt, it’s AWS that represents Amazon’s biggest opportunity in the AI space.
Its fully managed Bedrock service is the foundation of its AI offerings. Like its cloud rivals, Amazon offers a library of all the most in-demand foundational AI models, including those created by AI21 Labs, Cohere, Mistral AI, Meta Platforms, Stability AI, and Anthropic, among others.
Amazon has pinned its biggest hopes on Anthropic. Just last month, the company increased its stake in the AI start-up by $2.75 billion, bringing its total investment to $4 billion. Anthropic and its Claude 3 suite of AI models are considered the leading competitor to OpenAI’s ChatGPT, which attracted a $13 billion investment from Microsoft and arguably kicked off the AI gold rush.
In addition to the AI models offered by Bedrock, Amazon also offers Titan, a suite of pre-built large language models (LLMs) of its own creation, which can be tailored to suit a wide variety of AI-focused business needs.
Late last year, Amazon unveiled the latest versions of its custom AI processors, Trainium2 and Graviton4, which were designed for training and running AI models, respectively. The company is also expanding its collaboration with Nvidia, bringing its state-of-the-art GB200 Grace Blackwell Superchip and B100 Tensor Core GPUs to AWS. The combination offers a broad cross-section of AI functionality at price points that will appeal to a wide range of cloud customers.
The company also launched Amazon Q, a generative AI-powered assistant that can be tailored to each respective business to automate and streamline processes, thereby saving time and money.
Given its broad suite of offerings and multifaceted approach to AI, there’s little doubt that Amazon will be one of the leading players in the field.
All that potential at a bargain
Despite its recent run, Amazon offers all that potential at a modest price tag. The stock is currently selling for roughly 2.7 times forward sales, a bargain compared to its seven-year average of 3.5 times sales.
This provides savvy investors with the opportunity to invest in a once-in-a-generation opportunity at a discount.
Should you invest $1,000 in Amazon right now?
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, JPMorgan Chase, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
