Several Wall Street analysts have selected Amazon (NASDAQ: AMZN) as a top pick in 2024, including Thomas Champion at Piper Sandler, Doug Anmuth at JPMorgan Chase, and Scott Devitt at Wedbush Securities. The reason for that optimism can be summarized in three points: improving profitability in retail, strong momentum in digital advertising, and a potential reacceleration in cloud services revenue driven by demand for artificial intelligence (AI).

Argus Research analyst Jim Kelleher highlighted that last point in a recent note to clients, speaking on the potential of Amazon Web Services (AWS): "As the leading provider of infrastructure-as-a-service and other cloud services, AWS is uniquely positioned in the burgeoning AI-as-a-service market, and the Anthropic partnership meaningfully strengthens AWS at a key time in the AI gold rush."

That may surprise some investors given that Nvidia is viewed as the best AI stock in certain Wall Street circles. But the point is somewhat irrelevant because attempting to pick a single winner is a poor strategy. It would be more prudent to build a basket of AI stocks, and Amazon definitely deserves a place in such a basket. Here's why.

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Source Fool.com