Bill Ackman Sells Hilton Stake, Shifts to AI Giants
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy AMZN?
Source: Fool
- Hilton's Strong Performance: Bill Ackman invested in Hilton in 2018, during which time global hotel rooms increased from 913,000 to 1.3 million, and membership grew from 85 million to 243 million, driving revenue up 35% from $8.9 billion to over $12 billion and operating income up 88%, showcasing the success of its asset-light business model.
- Rising Market Valuation: Ackman initially purchased Hilton shares at a P/E ratio of 23, but the current ratio exceeds 32, indicating a significant increase in market expectations for future earnings, prompting Ackman to sell his stake in search of more attractive investment opportunities.
- New AI Investment Opportunities: Ackman has shifted his focus to Amazon and Meta Platforms, believing these tech giants have long-term growth potential in generative AI, particularly as Amazon's cloud services and Meta's advertising business benefit from advancements in AI technology.
- Capital Expenditure Plans: Despite both Amazon and Meta planning substantial increases in capital expenditures, Ackman believes these investments will yield strong future returns, especially as Amazon's cloud services have achieved triple-digit revenue growth amid a surge in AI spending.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
44 Analyst Rating
41 Buy
3 Hold
0 Sell
Strong Buy
Current: 207.240
Low
175.00
Averages
280.01
High
325.00
Current: 207.240
Low
175.00
Averages
280.01
High
325.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Amazon's E-Commerce Potential Underappreciated Amid AI Concerns
- E-Commerce Profit Potential: Amazon's North American retail division achieved a 6.9% profit margin last year, indicating strong profitability in its e-commerce business, with expectations of easily reaching 10% and potentially 15% in the coming years.
- Advertising Growth: The growth in higher-margin segments like advertising is expanding Amazon's overall profit pool, and while investments in new projects may compress margins in the short term, they are expected to create long-term value.
- Low Stock Valuation: Amazon's current P/E ratio of 28.5 is among its lowest historically, reflecting the market's underestimation of its future profit potential, especially as retail could reach $750 billion in revenue in the next few years.
- Importance of Cost Control: Amazon must maintain cost discipline over the next decade to ensure steady growth in its international market revenue of $162 billion, which will drive overall profitability improvements.
See More
Amazon's Heavy Investment in AI Infrastructure
- Revenue Growth Potential: Amazon Web Services (AWS) achieved a 24% revenue growth last quarter and is expected to accelerate in the coming year, with management projecting revenue growth from $129 billion to $600 billion by 2036, indicating strong market demand and long-term profitability.
- Retail Division Performance: Amazon's retail segment grew revenue by 10% year-over-year in North America, with a profit margin of 6.9% over the past 12 months, showcasing ample room for continued expansion, particularly driven by advertising, third-party seller services, and subscriptions.
- Operating Margin Improvement: Amazon's consolidated operating margin reached a record high of 11.8%, and if it can expand to 15% while revenue grows to $1 trillion, it is projected to generate $150 billion in operating earnings in the coming years, enhancing its investment appeal.
- Market Value Assessment: With a market capitalization of $2.2 trillion, Amazon's stock is viewed as a good value; despite current investor concerns over cash flow pressures from heavy investments, long-term holders are expected to reap substantial rewards.
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- Price Breakthrough: Cisco has recently surpassed its 2000 peak in February, and although its recovery has been gradual, the stock has broken above its trading range with a target price nearing $86.60, indicating market confidence in its future performance.
- Technical Formation: The current cup and handle pattern suggests potential upward momentum, and investors may increase buying pressure upon confirmation of returning positive momentum, which could drive the stock closer to its historical highs.
- Relative Performance: Cisco has seen a roughly 1,000% increase since 2002, which, while less impressive than the 1,600% surge from 1994 to 2000, reflects a more sustainable growth pace, indicating a gradual restoration of market confidence.
- Market Environment: Over the coming months, Cisco will continue to leverage its short-term bullish formation, and if it can maintain recent gains and trend higher, it may achieve sustained outperformance relative to the Nasdaq 100 index.
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Bill Ackman Sells Hilton Stake, Shifts to AI Giants
- Hilton's Strong Performance: Bill Ackman invested in Hilton in 2018, during which time global hotel rooms increased from 913,000 to 1.3 million, and membership grew from 85 million to 243 million, driving revenue up 35% from $8.9 billion to over $12 billion and operating income up 88%, showcasing the success of its asset-light business model.
- Rising Market Valuation: Ackman initially purchased Hilton shares at a P/E ratio of 23, but the current ratio exceeds 32, indicating a significant increase in market expectations for future earnings, prompting Ackman to sell his stake in search of more attractive investment opportunities.
- New AI Investment Opportunities: Ackman has shifted his focus to Amazon and Meta Platforms, believing these tech giants have long-term growth potential in generative AI, particularly as Amazon's cloud services and Meta's advertising business benefit from advancements in AI technology.
- Capital Expenditure Plans: Despite both Amazon and Meta planning substantial increases in capital expenditures, Ackman believes these investments will yield strong future returns, especially as Amazon's cloud services have achieved triple-digit revenue growth amid a surge in AI spending.
See More
Investment Analysis of Google and Amazon
- Google's Market Advantage: Google's search engine commands approximately 90% of the global market share and owns multiple internet assets like YouTube, positioning it strongly in digital advertising and cloud computing, which is expected to continue driving revenue growth.
- AI Technology Leadership: Google possesses a complete AI technology stack, including its proprietary TPU chips and the Gemini model, which not only reduces AI model training costs but also enhances market penetration through its Chrome browser and Android system, creating a powerful network effect.
- Amazon's Cloud Computing Growth: Amazon's cloud computing unit, AWS, is its most profitable segment, and the company is aggressively expanding its data center capacity to meet market demand, while partnerships with Anthropic and OpenAI are expected to further accelerate revenue growth.
- Logistics Network Advantage: Amazon has the largest logistics network in the U.S., and its automation and robotics capabilities significantly reduce delivery costs and enhance efficiency, which is anticipated to drive sustained profitability growth in its e-commerce and advertising businesses.
See More
Three AI Stocks Investors Regret Selling After Earnings
- Micron's Strong Earnings: Micron Technology (MU) reported a fiscal second-quarter revenue of $23.9 billion, nearly tripling year-over-year, with gross margins soaring from 36.8% to 74.4%; however, the stock fell 3.33% due to profit-taking and market concerns over the end of the DRAM super cycle.
- Strategic Customer Commitment: The company secured its first-ever five-year strategic commitment for high bandwidth memory (HBM), marking a significant shift in its business model that enhances revenue predictability and reduces cyclical volatility.
- Amazon's Cloud Growth: Amazon (AMZN) saw a 24% increase in cloud revenue in Q4, its fastest growth in over three years, and despite a 2.48% stock increase, investors are worried about the $200 billion capital expenditures aimed at boosting AI data center capacity.
- Microsoft's Continued Growth: Microsoft (MSFT) experienced a 17% revenue increase in Q2, driven by a 39% surge in Azure sales; although the stock dipped 0.49%, its strong cloud performance and partnership with OpenAI position it well for future growth.
See More
Amazon's E-Commerce Potential Underappreciated Amid AI Concerns
- E-Commerce Profit Potential: Amazon's North American retail division achieved a 6.9% profit margin last year, indicating strong profitability in its e-commerce business, with expectations of easily reaching 10% and potentially 15% in the coming years.
- Advertising Growth: The growth in higher-margin segments like advertising is expanding Amazon's overall profit pool, and while investments in new projects may compress margins in the short term, they are expected to create long-term value.
- Low Stock Valuation: Amazon's current P/E ratio of 28.5 is among its lowest historically, reflecting the market's underestimation of its future profit potential, especially as retail could reach $750 billion in revenue in the next few years.
- Importance of Cost Control: Amazon must maintain cost discipline over the next decade to ensure steady growth in its international market revenue of $162 billion, which will drive overall profitability improvements.
See More
Amazon's Heavy Investment in AI Infrastructure
- Revenue Growth Potential: Amazon Web Services (AWS) achieved a 24% revenue growth last quarter and is expected to accelerate in the coming year, with management projecting revenue growth from $129 billion to $600 billion by 2036, indicating strong market demand and long-term profitability.
- Retail Division Performance: Amazon's retail segment grew revenue by 10% year-over-year in North America, with a profit margin of 6.9% over the past 12 months, showcasing ample room for continued expansion, particularly driven by advertising, third-party seller services, and subscriptions.
- Operating Margin Improvement: Amazon's consolidated operating margin reached a record high of 11.8%, and if it can expand to 15% while revenue grows to $1 trillion, it is projected to generate $150 billion in operating earnings in the coming years, enhancing its investment appeal.
- Market Value Assessment: With a market capitalization of $2.2 trillion, Amazon's stock is viewed as a good value; despite current investor concerns over cash flow pressures from heavy investments, long-term holders are expected to reap substantial rewards.
See More
Cisco's Stock Gradually Recovers
- Price Breakthrough: Cisco has recently surpassed its 2000 peak in February, and although its recovery has been gradual, the stock has broken above its trading range with a target price nearing $86.60, indicating market confidence in its future performance.
- Technical Formation: The current cup and handle pattern suggests potential upward momentum, and investors may increase buying pressure upon confirmation of returning positive momentum, which could drive the stock closer to its historical highs.
- Relative Performance: Cisco has seen a roughly 1,000% increase since 2002, which, while less impressive than the 1,600% surge from 1994 to 2000, reflects a more sustainable growth pace, indicating a gradual restoration of market confidence.
- Market Environment: Over the coming months, Cisco will continue to leverage its short-term bullish formation, and if it can maintain recent gains and trend higher, it may achieve sustained outperformance relative to the Nasdaq 100 index.
See More
Bill Ackman Sells Hilton Stake, Shifts to AI Giants
- Hilton's Strong Performance: Bill Ackman invested in Hilton in 2018, during which time global hotel rooms increased from 913,000 to 1.3 million, and membership grew from 85 million to 243 million, driving revenue up 35% from $8.9 billion to over $12 billion and operating income up 88%, showcasing the success of its asset-light business model.
- Rising Market Valuation: Ackman initially purchased Hilton shares at a P/E ratio of 23, but the current ratio exceeds 32, indicating a significant increase in market expectations for future earnings, prompting Ackman to sell his stake in search of more attractive investment opportunities.
- New AI Investment Opportunities: Ackman has shifted his focus to Amazon and Meta Platforms, believing these tech giants have long-term growth potential in generative AI, particularly as Amazon's cloud services and Meta's advertising business benefit from advancements in AI technology.
- Capital Expenditure Plans: Despite both Amazon and Meta planning substantial increases in capital expenditures, Ackman believes these investments will yield strong future returns, especially as Amazon's cloud services have achieved triple-digit revenue growth amid a surge in AI spending.
See More
Investment Analysis of Google and Amazon
- Google's Market Advantage: Google's search engine commands approximately 90% of the global market share and owns multiple internet assets like YouTube, positioning it strongly in digital advertising and cloud computing, which is expected to continue driving revenue growth.
- AI Technology Leadership: Google possesses a complete AI technology stack, including its proprietary TPU chips and the Gemini model, which not only reduces AI model training costs but also enhances market penetration through its Chrome browser and Android system, creating a powerful network effect.
- Amazon's Cloud Computing Growth: Amazon's cloud computing unit, AWS, is its most profitable segment, and the company is aggressively expanding its data center capacity to meet market demand, while partnerships with Anthropic and OpenAI are expected to further accelerate revenue growth.
- Logistics Network Advantage: Amazon has the largest logistics network in the U.S., and its automation and robotics capabilities significantly reduce delivery costs and enhance efficiency, which is anticipated to drive sustained profitability growth in its e-commerce and advertising businesses.
See More
Three AI Stocks Investors Regret Selling After Earnings
- Micron's Strong Earnings: Micron Technology (MU) reported a fiscal second-quarter revenue of $23.9 billion, nearly tripling year-over-year, with gross margins soaring from 36.8% to 74.4%; however, the stock fell 3.33% due to profit-taking and market concerns over the end of the DRAM super cycle.
- Strategic Customer Commitment: The company secured its first-ever five-year strategic commitment for high bandwidth memory (HBM), marking a significant shift in its business model that enhances revenue predictability and reduces cyclical volatility.
- Amazon's Cloud Growth: Amazon (AMZN) saw a 24% increase in cloud revenue in Q4, its fastest growth in over three years, and despite a 2.48% stock increase, investors are worried about the $200 billion capital expenditures aimed at boosting AI data center capacity.
- Microsoft's Continued Growth: Microsoft (MSFT) experienced a 17% revenue increase in Q2, driven by a 39% surge in Azure sales; although the stock dipped 0.49%, its strong cloud performance and partnership with OpenAI position it well for future growth.
See More
