Amazon.com Inc. (NASDAQ:AMZN) is a darling on Wall Street and this is obvious in the strong bullish trend of the stock. In the last year, shares of Amazon have gained an impressive 104.5% – more than doubling its share price. In the year-to-date period, shares of the firm have recorded 101.5% gains. Now, hedge funds that are known to be very cautious in their investments are making bold bets on the prospects of Amazon.
Hedge funds make bullish bet on Amazon
News has it that a legendary hedge fund manager at Duquesne Capital, Stanley Druckenmiller has voiced out his support for the bullish case on Amazon. While speaking with CNBC, the fund manager said that he loved Amazon because the firm is focused on the long-term prospects rather than being fixated on the short term outlook. In his words, “Oh yeah, I love Amazon… they’re investing in their future. [Jeff] Bezos is a serial monopolist,”
Druckenmuller also compared Amazon (NASDAQ:AMZN) with IBM noting that Amazon is not concerned about what Wall Street thinks of its earnings. He says, “IBM has missed three quarters since 2006. They really care about their quarterly earnings.” Amazon doesn’t care about earnings, all it cares about now is growing its business, the earnings will come soon enough. In the words of the analyst, “the last 19 quarters, Amazon has missed their quarterly earnings nine times. They don’t give a damn,”
Druckenmuller also appears to be upbeat about Amazon’s AWS. He says, “if you’re starting a business today, you don’t need a tech department, you don’t need a back office, you can use AWS. By the way, it’s just ripping to shreds the 10 or 15 consultants from IBM”.
Amazon’s AWS gets some love from Wall Street
Amazon (NASDAQ:AMZN) already controls the ecommerce space with an e-commerce platform where it sells about all things sellable. The firm is already making inroads into the video streaming space with Amazon Prime TV, its drones might change the face of deliveries, and fire phone is not yet dead. However, the suits on Wall Street believe that Amazon Web Services (AWS) is special business segment that would ensure that the firm stays buoyant for a long time.
Deutsche Bank analysts, Karl Keirstead and Ross Sandler were full of praise for the AWS segment. They believe that Jeff Bezos will see more money from AWS and from his retail business in the next 10 years. In their words, “If AWS were to grow at a 40%-45% clip near term and decelerate to 30% in the out years, and Amazon’s retail business was to grow gross profits by 15% over the longer-term, AWS would indeed be larger than Amazon retail (on a gross profit basis) in the year 2024,”
They also believe that AWS has the potential to eclipse rivals in the cloud. In their words, “Measured by revenues, AWS is approximately 6x larger than its biggest rival Microsoft Azure and is arguably the greatest disruptive force in the entire enterprise technology market today”.