Amazon (AMZN) topped second-quarter earnings and revenue estimates, but a cautious outlook for Q3 sent shares tumbling over 8% on Friday. This came as investors are eager to see returns on AMZN’s massive $100 billion AI investment. Nevertheless, investors who still believe in the tech giant’s long-term growth, especially its cloud and AI ambitions, may consider investing in these two ETFs: Fidelity MSCI Consumer Discretionary Index ETF (FDIS) and Consumer Discretionary Select Sector SPDR Fund (XLY).
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Let’s take a deeper look at these two ETFs.
Fidelity MSCI Consumer Discretionary Index ETF
The FDIS ETF provides diversified exposure to Amazon stock alongside other major players like Tesla (TSLA), Home Depot (HD), and McDonald’s (MCD). It is a low-risk way to benefit from Amazon’s long-term growth in e-commerce, cloud, and AI. Importantly, Amazon stock accounts for 24.43% of the FDIS ETF’s total holdings.
Overall, the ETF has $1.84 billion in assets under management (AUM). Also, an expense ratio of 0.08% makes it cost-effective for long-term investors. Over the past three months, the FDIS ETF has generated a return of 11.49%.
On TipRanks, FDIS has a Moderate Buy consensus rating based on 184 Buys, 64 Holds, and eight Sells assigned in the last three months. At $106.40, the average FDIS ETF price target implies 13.9% upside potential.
Consumer Discretionary Select Sector SPDR Fund
The XLY ETF tracks the performance of the Consumer Discretionary Select Sector Index, which represents the consumer discretionary sector of the S&P 500 Index (SPX). This sector includes industries like retail, entertainment, automobiles, and luxury goods.
AMZN stock constitutes 23.79% of the ETF’s holdings. Apart from AMZN, some of the top stocks in the XLY ETF are Tesla, Lowe’s (LOW), and Booking Holdings (BKNG). Overall, the ETF has $22.71 billion in AUM. Also, it has an expense ratio of 0.09%. The XLY ETF has returned 12.29% in the past three months.
Turning to Wall Street, the ETF has a Moderate Buy consensus rating. Of the 53 stocks held, 45 have Buys, seven Holds, and one Sell rating. At $242.70, the average XLY ETF price target implies a 12.32% upside potential.
Concluding Thoughts
ETFs provide indirect exposure to AMZN stock, reducing risk compared to investing directly in the stock. Furthermore, ETFs are a liquid and transparent way to participate in the market. Investors seeking ETF recommendations might consider XLY and FDIS, as these ETFs offer exposure to Amazon stock.