We recently published a list of 10 Stocks in Wall Street’s Watchlist. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other stocks in Wall Street’s watchlist.

Dan Niles, Niles Investment Management founder, in a latest program on CNBC reiterated his concerns about a slowdown in AI spending and said that major technology companies were already facing the impact of a downbeat trend in the industry before the tariff wars started:

“When the MAG 7 reported the December quarter or calendar Q4, six of the seven had their March revenue estimates already cut. So think about that for a second. But the thing is, when the Fed’s cutting like it was last year, nobody cares, right? If the stocks are going up, the charts look good. Why worry about fundamentals or valuations?,” Niles said. “Because the stocks are going higher. So looking forward, I expect all the estimates to come down yet again for the June quarter. When these companies report the March quarter, they were already having troubles when they reported the December quarter before all this tariff stuff kicked in.”

Niles said that companies were buying more ahead of the China tariffs because they expected that duties were coming from the US.

“You can just see that from the China export data already, where for China as a whole, in the month of March, exports were up 12.4%. People were expecting 4.6%. So that’s a massive beat there. And so you can already tell demand’s being pulled forward. So my thought was there was a payback period coming anyway.”

READ ALSO: 7 Best Stocks to Buy For Long-Term  and 8 Cheap Jim Cramer Stocks to Invest In.

For this article, we picked 10 stocks Wall Street analysts have been talking about lately. With each stock, we have mentioned its hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

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Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Investors: 286

Stephanie Link, Hightower Advisors CIO, explained in a latest program on CNBC her bullish view on Amazon.com, Inc. (NASDAQ:AMZN) and why she’s buying the stock:

“I trimmed Amazon in early February. The stock is down 19% since then. It’s now trading at a pretty interesting valuation in my mind—13 times EBITDA versus a historical average of 17.5 times. When I sold Amazon, it was at 17 times EBITDA, so it was rich relative to its history. The story on retail is getting bigger—Amazon, Walmart, Costco—they had 46% market share. Amazon has 28% market share and actually grew their market share by 410 basis points in the past quarter, so they’re humming there. Profitability at AWS is absolutely on the rise, and I think they’re still capacity constrained. So I expect the second half of the year to see an acceleration in AWS.”

Despite weak guidance, Amazon could easily surpass $100 billion in operating income within the next two years because of its AWS growth engine. In the latest quarter, Amazon Web Services sales jumped 19% and operating profit for the segment jumped 62% in 2024 on an annual basis.

The market is currently forecasting $6.27 per share in profits this year (a 13% YoY growth) and $7.59 per share next year (a 21% YoY growth). Amazon’s stock is priced at a profit multiple of 30.2x. This valuation may look rich, but when we incorporate AWS growth, the stock has more upside potential.

Parnassus Core Equity Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN) posted better-than-expected quarterly earnings, lifting investor confidence in the e-commerce giant’s ability to generate margin while continuing to invest into its large AI and retail end markets.

Amazon’s shares experienced volatility throughout the year as IT spending and the company’s margin structure came under scrutiny. Despite this, the stock outperformed as sentiment and results improved across both the overall environment for Amazon Web Services and the company’s ability to show margin.”

Overall, AMZN ranks 1st on our list of stocks in Wall Street’s watchlist. While we acknowledge the potential of AMZN, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.