Forget Nvidia: Billionaires are buying up these artificial intelligence (AI) stocks instead

After an astronomical rise, investors are unsure what to do NVIDIA stock. There are reasons why the price could continue to rise, but also reasons why it could take a break.

However, there is another stock that most investors currently agree to buy: Amazon (AMZN -0.74%)This artificial intelligence (AI) powerhouse is getting better and better, and billionaires are snapping it up.

Be like billionaires

Some of the most famous billionaires have bought Amazon shares. Ray Dalio of Bridgewater Associates increased his position by nearly 1.6 million shares, or 153 percent, in the second quarter. Ken Griffin of Citadel Advisors bought more than a million shares, for a total of nearly 7.7 million, an increase of 17 percent.

I often remind investors that, unless they are also a billionaire hedge fund manager, their portfolio composition and decisions will unfortunately look different than those of the super-rich. But Amazon is a stock that could be of interest to almost any type of investor.

Amazon is there for everyone

Amazon has a little bit of everything. It's a technology stock, but it's focused on retail. It offers the novelty of AI but the value of an established industry giant. It's growing, but it's also highly profitable. That's why it could belong in all kinds of portfolios and has even landed on Warren Buffett's list of value investors. Berkshire-Hathaway Portfolio.

Amazon has a dominant lead in two fast-growing categories: e-commerce and cloud computing. The company accounts for more than a third of all e-commerce sales in the US, an astonishing market share advantage that is unmatched in almost any other industry.

The company continues to invest in the e-commerce business with upgrades and offers. One of its newer and fastest-growing areas is Buy With Prime, a service for third-party sellers that offer Amazon-powered Prime checkout on their direct-to-consumer sites. Buy With Prime sales are up 45% so far this year, and vendors have seen an average 16% increase in revenue per shopper when they offer Buy With Prime. The company keeps adding new merchants who see the benefits, with the number of merchants offering it on their sites in 2024 up 25% year over year.

One merchant pointed out that displaying the “Buy with Prime” button creates a higher level of trust among small businesses, and that leveraging Amazon's unrivaled fulfillment network in the U.S. provides more opportunities for these businesses. Amazon's trusted brand means a lot to both merchants and customers, and Amazon leverages that trust and brand to drive higher sales.

Amazon also combines these efforts with its advertising business, which is its fastest-growing segment. Merchants using the Buy With Prime service can advertise on third-party platforms through Amazon's platform and use the highly targeted data to drive customers searching for their products to their direct-to-consumer websites. Amazon receives a share of both advertising revenue and sales, and more than 80 percent of merchants using the service reported meeting or exceeding their return on investment goals.

Last week, Amazon announced a new contract with PayPal Holdings to offer it as a payment option for “Buy with Prime”. The effects were felt in the form of a jump in PayPal's share price, but could also boost Amazon's sales.

Amazon shares also rose last week, but this was more likely a reaction to lower interest rates. This should lead to increased economic activity, and Amazon is well positioned – perhaps better than any other retailer – to benefit.

AI is for cloud developers

AI is actually for everyone, but the generative AI solutions that have caught investors' attention are aimed at Amazon's cloud customers, who operate through its Amazon Web Services (AWS) cloud computing business. Amazon is doing everything it can to stay in the AI ​​race and stay ahead of its competitors. The company has launched a range of products, services, features and upgrades to appeal to every demographic of customers, from micro-businesses to large enterprises, at every price point and for every need. In the last two weeks, the company announced a new round of deals with NXP Semiconductors, oracleAnd Intel in addition to new clients and rollouts.

AWS was a reliable growth company, typically above 30%, before the recent wave of inflation. The division's growth rate fell to very low double digits, but accelerated again to nearly 18% in the second quarter of 2024. Either way, AWS is still largely responsible for Amazon's operating profit, increasing its share to 63% of that metric in the second quarter.

Although the AI ​​business is already large and robust, it is still in its infancy. The technology will only continue to evolve and improve, and Amazon should remain at the forefront.

Amazon shares rise

Before the 2021 split, Amazon stock traded at four-digit prices, but now it's priced at a less intimidating three-digit figure. Plus, the stock is trading near its lowest price-to-earnings (P/E) ratio in years, making it even more attractive to investors of all kinds.

The share price has risen 26% this year, and investors should follow the example of billionaires and invest in the Amazon stock market with confidence.