Famed growth investor Cathie Wood enjoys delving into disruptive tech stocks, a trait much adored by investors eagerly eyeing her investment choices. While she usually gravitates towards established picks like Tesla and Teladoc Health, Wood occasionally surprises by embracing an under-the-radar initial public offering such as Tempus AI.
Amazon, a stock that rarely features in Ark Invest’s picks, found its way into Cathie Wood’s investment portfolio last week, raising eyebrows and curiosity. What could be driving Wood’s interest in Amazon at this juncture is worth pondering.
Diving into the Realm of Artificial Intelligence
A seasoned investor in the tech realm, Cathie Wood has a longstanding association with Amazon stock, holding significant positions across various exchange-traded funds (ETFs) for years. Amazon’s adherence to its “Day 1” philosophy, emphasizing perpetual innovation and growth, has intrigued Wood. With AI spearheading its recent advancements, Amazon presents an appealing proposition in this disruptive landscape.
As highlighted by CEO Andy Jassy, Amazon’s AI segment is experiencing substantial growth, boasting a multibillion-dollar run rate. Leveraging its vast data reservoir as the premier cloud-computing entity, Amazon is at the forefront of setting benchmarks in AI development. Jassy’s emphasis on enhancing flexibility at competitive pricing further underscores Amazon’s commitment to advancing its AI capabilities, a burgeoning industry poised for exponential growth.
Amazon’s Plunge Offers an Investment Opportunity
Successful investors often excel in seizing opportune moments. While market timing remains a challenging feat, astute investors capitalize on market downturns and unfavorable sentiments to acquire stocks at discounted rates. Cathie Wood’s recent accumulation of Amazon shares post-earnings decline stands as a testament to her tactical investment approach. Despite the temporary setback prompted by revenue misses and conservative sales guidance, Amazon’s stock has shown resilience post-earnings but remains attractively priced, down 9% from the recent earnings report.
While Ark Invest concludes its recent buying spree, the allure of Amazon at its current valuation remains palpable. Trading near decade-low valuations, Amazon stands as a rare gem warranting investor attention. The beckoning opportunity to acquire Amazon shares, coupled with its vast potential in e-commerce, advertising, and healthcare arenas, brings forth a strong case for investing in this standout stock at bargain prices.
Assessing the Investment Potential in Amazon
Prior to delving into Amazon investments, prudent consideration is essential. The Motley Fool Stock Advisor team recently unveiled the top ten stocks poised for substantial returns, with Amazon missing the coveted list. Reflecting on past recommendations by Stock Advisor, such as Nvidia in 2005, which could have yielded astronomical returns, underscores the value of insightful stock picks.
Considering Amazon’s diverse growth opportunities and its current undervaluation, investing in this disruptive tech giant could present a rewarding proposition for long-term investors seeking capital appreciation and portfolio diversification.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, sits on The Motley Fool’s board of directors. The Motley Fool has interests in and recommends Amazon, Nvidia, Teladoc Health, and Tesla. For further details, kindly refer to their disclosure policy.