If you’re seeking artificial intelligence market exposure in your portfolio, Amazon (NASDAQ:AMZN) stock is a great choice. However, some stock traders are apparently wringing their hands over Amazon’s legal troubles. I recommend staying calm and buying any share-price dips that may occur.
People often think of Microsoft (NASDAQ:MSFT) as a premier AI company because it invested $10 billion in OpenAI, but it isn’t the only Magnificent Seven company investing in next-generation AI technology. Amazon is a fierce competitor in the AI arms race. Investors shouldn’t give up just because of its current legal issues.
Antitrust Lawsuit Isn’t a Reason to Sell AMZN Stock
Besides AI investments, what else does Amazon have in common with Microsoft? The answer is: They’ve both been targets of U.S. regulatory anti-monopoly investigations.
According to a Reuters report, the U.S. Federal Trade Commission has filed a lawsuit against Amazon alleging that the company “had a monopoly in an online superstore market.”
The legal action also claims that Amazon “had a monopoly in the online marketplace for services.”
These aren’t the only complaints that the FTC is making about Amazon. Still, there’s a long history of U.S. regulators taking aim at gigantic companies, including Microsoft.
It’s practically a rite of passage for mega-companies that dominate specific markets, and it doesn’t typically resolve with the company collapsing.
Besides, Amazon has deep pockets and a stable of top-tier attorneys to represent the company. Just as Microsoft has withstood regulatory scrutiny, Amazon should be able to survive and thrive despite the FTC’s probe.
Amazon’s $4 Billion AI Investment
Meanwhile, Amazon is taking aim at AI industry competitors like Microsoft with a new service offering as well as a multibillion-dollar investment. This, really, ought to be what investors primarily focus on instead of Amazon’s legal issues.
First of all, Amazon is introducing a fully managed generative AI service for businesses, called Amazon Bedrock. This service provides a “choice of high-performing foundation models from leading AI companies,” plus a “broad set of capabilities to build generative AI applications.”
While Amazon Bedrock could potentially have a major impact on the generative AI industry, the biggest game-changer could be Amazon’s $4 billion investment in Anthropic, an AI technology developer based in San Francisco.
While Microsoft is investing directly in OpenAI, it’s worth noting that Anthropic was founded by former OpenAI executives Dario and Daniela Amodei.
Anthropic’s flagship product is named Claude. With complex reasoning and sophisticated dialogue functionalities, Claude delivers on the promise of generative AI in the 2020s.
Will Amazon’s $4 billion investment pay off? Only time will tell. However, I expect that while OpenAI will remain a redoubtable force in generative AI, Claude and Amazon will also make their mark on this hyper-growth market.
Don’t Worry, and Just Stay in the Trade
Amazon has gotten so big and so dominant that it’s now the target of a regulatory probe. The company might have to make some adjustments to placate the FTC, but there’s no doubt that Amazon will withstand the scrutiny.
Don’t ignore Amazon’s status as an AI industry leader and innovator. In the final analysis, AMZN stock is still a premier tech market investment. Now is the time to hold your shares, not sell them, because of overblown fears of prolonged legal problems.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
