This is the absolute leader in online shopping and remains a technology anchor on the US 1 list of top stock picks. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers. It has one of the most valuable brands in the world.
The company serves developers and enterprises through Amazon Web Services, which provides computing, storage, database, analytics, applications and deployment services that enable virtually various businesses. AWS is also the undisputed leader in the cloud now, and many top analysts see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market.
Like every year, online sales should continue to grow, especially during the busy Christmas shopping period, as Amazon remains the go-to portal for shoppers looking for holiday bargains and a way to stay out of brick-and-mortar stores this year if they choose to.
The company crushed Wall Street expectations and sold off big-time. The analysts noted this:
Amazon reported revenue/GAAP EPS of $96.1 billion/$12.37, well above Street at $92.7 billion/$7.55 as their quarter results beat across the board. Fourth quarter profit guide at $1 billion-$4.5 billion was the main blemish for the quarter, driven by $4 billion in COVID costs and fulfilment center openings. Results underscore strong profitability potential of the retail business and continued AWS strength.
BofA Securities had a $3,560 price objective but boosted it to $3,650. The consensus figure is even higher at $3,755.30, and Amazon.com stock was trading at $3,061.95.
This sector leader made a huge purchase last year that is proving to be a solid tailwind for the company. Nvidia Corp. (NASDAQ: NVDA), a company that rarely has grown through acquisitions, bought Mellanox and paid a whopping $6.9 billion in cash in a deal that closed back in April. In what actually was somewhat of a duel, Nvidia knocked out Intel in its bid to buy the chipmaker, and the deal has helped Nvidia boost its business of making data center chips that help power cloud computing.
Mellanox’s BlueField intelligent network adapters are another version of data center co-processing acceleration. Top Wall Street analysts see the combination of Nvidia and Mellanox as a definite threat to Intel’s data center CPU dominance of workloads.
Nvidia recently outlined a $100 billion total addressable market for its data center business by 2024, or twice the $50 billion outlined at its last investor day. The upside includes $20 billion from core Mellanox networking, $10 billion from new class of data processing units and another $10 billion from the emerging edge AI EGX computing platform.
Together, Nvidia’s computing platform and Mellanox’s interconnects power over 250 of the world’s Top 500 supercomputers and have as customers every major cloud service provider and computer maker. The company will not be reporting the quarter until November 18.
BofA Securities has a huge $650 price objective. The consensus estimate is $571.37, and Nvidia stock traded at $508.95 on Monday, which is down over 11% from the high posted in September.
We purposely avoided both Facebook Inc. (NASDAQ: FB) and Twitter Inc. (NYSE: TWTR), which both posted very solid results but are embroiled in arguments with the government over potential censorship and other issues. It may make sense to watch these closely for settlements or changes and add shares accordingly.
Again, while the volatility has a good chance to remain even after the elections, buying these top technology companies at a discount to previously posted highs makes sense for aggressive growth investors who are looking to increase positions or initiating new ones. As we often recommended, scale buying shares now until the end of the year may be a good strategy.
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