Quick Summary
- Elite hedge funds like Appaloosa, Baupost, and Pershing Square are aggressively accumulating Amazon shares, with several making it their top portfolio position.
- Despite modest year-to-date gains of approximately 1.5% in 2026, Amazon stock trails AI-focused competitors significantly.
- Amazon Web Services posted 28% year-over-year expansion in Q1 2026, reaching $37.6 billion—the strongest quarterly performance in over three years.
- On June 23, ARK Investment Management purchased 41,141 shares of Amazon valued at approximately $9.6 million.
- Bank of America analysts maintain their Buy recommendation with a $310 target price for Amazon shares.
While Amazon (AMZN) stock has delivered only about 1.5% returns year-to-date, significantly trailing the broader S&P 500 index, this performance gap has attracted considerable attention from some of Wall Street’s most sophisticated investors.
Appaloosa Management, led by David Tepper, and Seth Klarman’s Baupost Group have both elevated Amazon to their number one portfolio position. Bill Ackman’s Pershing Square Capital has constructed an entirely new stake over the previous twelve months, now worth approximately $2.4 billion, representing the fund’s second-largest investment.
Sanders Capital, established by former AllianceBernstein chief Lewis Sanders, expanded its Amazon holdings by 100% during the first quarter of 2026, bringing total ownership to 29.8 million shares valued at roughly $6.2 billion.
Concurrently, ARK Investment Management under Cathie Wood acquired 41,141 shares of Amazon on June 23, totaling approximately $9.6 million at the day’s closing price of $234.27. This purchase occurred amid widespread selling pressure across technology stocks, particularly affecting semiconductor and artificial intelligence companies.
The prevailing investment thesis among these institutional buyers centers on breakup valuation methodology. ValueWorks founder Charles Lemonides estimates that AWS alone justifies approximately half of Amazon’s $2.5 trillion market capitalization, with retail operations comprising the remaining portion. Under this framework, additional revenue streams including advertising, media content, and streaming services represent essentially no additional cost.
“Their businesses are worth more than the share price and they’re in the catbird seat on just about everything,” Lemonides said. “Why wouldn’t one want to own Amazon today?”
Cloud Infrastructure Fueling Investment Thesis
Amazon Web Services delivered 28% year-over-year revenue expansion during Q1 2026, totaling $37.6 billion and exceeding analyst consensus estimates of $36.64 billion. This marked the division’s most robust growth period in fifteen quarters, as CEO Andy Jassy emphasized.
The company’s committed revenue pipeline reached $364 billion as of the March 31 quarter end. Notably, this total excludes Anthropic’s agreement to allocate over $100 billion toward AWS services throughout the coming decade.
Across all divisions, Amazon generated $181.5 billion in first-quarter 2026 revenue, representing 17% annual growth, while operating income reached $23.9 billion. Earnings per share came in at $2.78, substantially exceeding Wall Street’s $1.64 projection.
Management has indicated capital expenditure plans approximating $200 billion for 2026, predominantly allocated toward AWS infrastructure expansion. This substantial investment temporarily constrains near-term profitability metrics, contributing to valuation concerns despite strong underlying business momentum.
Price Multiple Considerations
Amazon currently commands approximately 27 times forward earnings, exceeding both Microsoft and Nvidia at 18-20 times, as well as Meta Platforms at 17 times. The broader Nasdaq 100 index trades around 24 times forward estimates, also appearing more attractive by this measure.
However, Morgan Stanley analysts have previously highlighted that Amazon trades at a meaningful discount to technology peers when normalized for anticipated profit expansion rates.
Bank of America maintains its Buy rating alongside a $310 price objective, derived primarily from sum-of-the-parts analysis that attributes significant value concentration to the AWS division. The firm additionally projects Amazon Prime Day will deliver approximately $22 billion in transaction volume and anticipates Q2 revenue at or exceeding the upper boundary of company guidance.
Contrarian positions exist among prominent investors. Berkshire Hathaway reduced its Amazon stake from 10 million shares to essentially nothing according to recent regulatory filings. Stanley Druckenmiller’s Duquesne Family Office eliminated roughly 94% of its direct equity position, though he simultaneously increased call option exposure from 100,000 to 200,000 shares.
According to Quiver Quantitative tracking data, institutional investors collectively increased Amazon holdings by 253 million shares during the most recent reporting period.
