Forget GameStop Stock, This Is a Much Better Buy

Since its epic meme stock rally in 2021, GameStop (NYSE: GME) has never quite left the limelight. Every now and then, the stock will experience sudden surges when there is positive news or if a notable person in the investing community mentions the stock.

For instance, The Big Short's Michael Burry recently mentioned GameStop on X, and the stock surged higher. Many meme stock investors still clearly follow the name.

Image source: Getty Images.

GameStop has also improved its operations and recently reported strong quarterly results, with significant growth in revenue and earnings. The company has seen success in its hardware division, selling consoles like the Nintendo Switch 2. GameStop has also ventured into the collectibles business, offering items such as trading cards, and is experiencing strong growth in this area as well.

While GameStop may offer promise, this stock is a much better buy.

Gain exposure to AI with embedded safety

Rather than taking a big risk on GameStop, investors with a long-term investment horizon would be better served by investing in e-commerce and cloud giant Amazon (NASDAQ: AMZN).

Most investors probably interact with Amazon's massive digital e-commerce business on a weekly or even daily basis, where they can purchase almost any item and have it shipped directly to their door in a matter of days. The logistics network Amazon has built is simply astounding and serves as a one-of-a-kind moat in the competitive e-commerce space.

Furthermore, Amazon Web Services (AWS) is one of the premier cloud providers that allows businesses to essentially rent server space owned and operated by Amazon. These businesses can utilize AWS to store their data in the cloud, enabling them to run their operations more efficiently. Not only does the cloud space have a significant runway, as many businesses have yet to transition to the cloud, but the large traditional cloud players also stand to benefit immensely from artificial intelligence (AI).

AI will help cloud providers, such as Amazon, better manage their own operations and offer businesses the ability to run their own AI applications, which is why cloud providers like Amazon are investing heavily in AI infrastructure.

Now, as many investors are keenly aware, there is debate over AI valuations and whether hyperscalers like Amazon are spending too much on AI infrastructure. We simply will not know the answer to this question for several years. However, in buying Amazon, long-term investors are acquiring a tremendous core business that generates strong earnings and free cash flow, with significant potential upside from AI.

While the road may be bumpy, I expect Amazon to continue dominating its core markets for decades to come. I also find it likely that Amazon will ultimately benefit from AI in the long term, even if the path is not linear.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Nintendo. The Motley Fool has a disclosure policy.