Amazon.com (AMZN) Dropped on Guidance That Fell Short of Market Expectations

Loomis Sayles, an investment management company, released its “Global Growth Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, the fund returned -3.35% compared to -1.32% for the MSCI ACWI Net Index. Stock selection in consumer staples, communication services, and healthcare sectors, and allocations to the information technology and healthcare sectors positively impacted the fund’s relative performance. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Loomis Sayles Global Growth Fund highlighted stocks such as Amazon.com, Inc. (NASDAQ:AMZN). Amazon.com, Inc. (NASDAQ:AMZN) provides consumer products, advertising, and subscription services through online and physical stores that operate through North America, International, and Amazon Web Services (AWS) segments. The one-month return of Amazon.com, Inc. (NASDAQ:AMZN) was 7.08%, and its shares gained 11.20% of their value over the last 52 weeks. On May 23, 2025, Amazon.com, Inc. (NASDAQ:AMZN) stock closed at $200.99 per share with a market capitalization of $2.134 trillion.

Loomis Sayles Global Growth Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2025 investor letter:

"Online retailer Amazon.com, Inc. (NASDAQ:AMZN) offers millions of products – sold by Amazon or by third parties – with the value proposition to consumers of selection, price, and convenience. Amazon’s enterprise IT business, Amazon Web Services (AWS), offers a suite of secure, on-demand, cloud-computing services, with a value proposition to clients of speed, agility, and savings. In both of its core markets, Amazon possesses strong and sustainable competitive advantages that would be difficult for competitors to replicate. In e-commerce, these include its brand, scale, technology platform, network advantage, and logistics and distribution systems. AWS benefits from its brand, technology platform, and massive scale, which allows it to pass along cost savings while continuing to innovate. Growing well in excess of their underlying markets, both of Amazon’s businesses are gaining market share. Led by visionary founder and Executive Chairman Jeff Bezos, Amazon invests aggressively to expand and leverage its customer base, brand, and infrastructure, targeting businesses with strong financial returns that are anticipated to offer large and enduring growth opportunities.

A portfolio holding since fund inception, Amazon reported quarterly financial results that were fundamentally solid and generally above management guidance and consensus expectations. Shares may have responded negatively to guidance for the current quarter that was below expectations for both revenue and operating income. For the quarter, net sales of $188 billion increased 9% year over year in constant currency. E-commerce and related revenue, which accounted for approximately 82% of revenue, was driven by 7% growth in the online store, 9% growth in third-party services, 18% growth in advertising, and 10% growth in retail subscription services such as Prime membership and digital media subscriptions. E-commerce unit sales growth of 11% suggest that the company expanded its market share both in North America and globally during the period. The company’s e-commerce leadership is also benefiting its advertising business, which was led by its sponsored products unit and is further expected to benefit from newer streaming ads on Prime. Over the past decade, the company has grown its advertising business from what we estimate was approximately $1 billion in 2014, to over $55 billion in revenue over the past 12 months, and which we believe will continue to grow at a mid-teens rate over our long term investment horizon…” (Click here to read the full text)

Amazon.com, Inc. (NASDAQ:AMZN) is in first position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 328 hedge fund portfolios held Amazon.com, Inc. (NASDAQ:AMZN) at the end of the first quarter compared to 339 in the fourth quarter. In Q1 2025, Amazon.com, Inc. (NASDAQ:AMZN) achieved global revenue of $155.7 billion, representing an 10% year-over-year growth excluding the impact of foreign exchange. While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Amazon.com, Inc. (NASDAQ:AMZN) and shared Polen Global Growth Strategy's views on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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