Bernstein names Amazon its 'best idea' for internet stocks in 2024. We see a lot to like, too

Club holding Amazon (AMZN) is a stock to own going into 2024, with the ecommerce giant poised for further profitability, according to Bernstein Research — a view we enthusiastically share. Bernstein on Tuesday named Amazon its "best idea" in the internet space for 2024, citing acceleration in its cloud business, cost discipline, digital advertising growth, and its continued leadership in ecommerce. The firm has an outperform rating on Amazon stock, with a price target of $175 a share. "Amazon is doing incredibly well," Jim Cramer said Tuesday. Shares of AMZN have significantly outperformed the broader market in 2023, surging 75% year-to-date versus the S & P 500 's 18% gain over the same period. Amazon stock closed up 1.4% on Tuesday, to settle at $146.88 a share. Jim said he's not encouraging investors who don't own Amazon stock to buy while it's trending higher, but he advised those who have a stake not to sell. He added that he was "very averse" to selling Amazon because revenue at cloud unit Amazon Web Services is on its way back up after a difficult year-and-a-half, and we want to be in the stock to capture that growth. AMZN YTD mountain Amazon stock performance year-to-date. Bernstein highlighted AWS as Amazon's "profit engine." Analysts at the bank argued that a lower fixed-cost base and revenue acceleration should drive significant operating income growth at AWS in 2024, which has already shown signs of stabilization in the back half of this year. At the same time, management has been improving efficiencies on the retail side by optimizing costs via a regionalization strategy for shipping that's aided delivery times, while also boosting demand. Bernstein estimated that retail margins are on track to reach high-single-digit percentages, supported by Amazon's "best-in-class" fulfillment network and its "defensive product mix." Bernstein also predicted that the revenue growth rate for digital advertising will accelerate in 2024 and that operating margins could exceed 60%, helped by the company's ad-supported tier for Prime Video and live sports. More broadly, Amazon's operating income is "poised for an unprecedented run" in 2024 and beyond, Bernstein analysts said. And shares should continue their strong run into 2024 as profitability continues to improve, the analysts argued, particularly as the company further reduces its expenses and scales back costly and non-core operations. (Jim Cramer's Charitable Trust is long AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Club holding Amazon (AMZN) is a stock to own going into 2024, with the ecommerce giant poised for further profitability, according to Bernstein Research — a view we enthusiastically share.