Key Takeaways
- Prominent hedge funds such as Appaloosa, Baupost, and Pershing Square have significantly increased their Amazon stakes, with several designating it as their top portfolio position.
- Amazon shares have gained merely 3.4% since the start of the year and roughly 1.5% in 2026 to date, substantially underperforming compared to artificial intelligence-focused competitors.
- Amazon Web Services delivered 28% growth during Q1 2026, reaching $37.6 billion in revenueâmarking its strongest expansion pace in over three years.
- Cathie Wood’s ARK investment funds acquired 41,141 Amazon shares valued at approximately $9.6 million on June 23.
- Bank of America holds a Buy recommendation on Amazon stock with a price objective of $310.
Amazon (AMZN) shares have delivered approximately 1.5% gains year-to-date, significantly trailing the S&P 500’s performance. However, this underperformance is precisely what’s attracting some of the investment world’s most sophisticated hedge fund managers.
David Tepper’s Appaloosa Management and Seth Klarman’s Baupost Group have both elevated Amazon to their number one portfolio position. Bill Ackman’s Pershing Square constructed its Amazon stake from the ground up throughout the previous year, with the position now worth approximately $2.4 billionâranking as the fund’s second-biggest investment.
Sanders Capital, established by former AllianceBernstein chief executive Lewis Sanders, expanded its Amazon holdings by 100% during Q1 2026, reaching 29.8 million shares valued at about $6.2 billion.
On June 23, Cathie Wood’s ARK investment vehicles acquired 41,141 Amazon shares worth around $9.6 million, calculated using the day’s closing price of $234.27. This purchase occurred amid a widespread technology sector downturn that particularly hammered semiconductor and AI-focused stocks.
The unifying factor among these buyers centers on a sum-of-the-parts valuation framework. ValueWorks founder Charles Lemonides calculates AWS alone represents approximately half of Amazon’s $2.5 trillion valuation, with the retail operations comprising the remaining half. Under this analysis, everything elseâincluding advertising, media content, and streaming servicesâeffectively comes at zero 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?”
AWS Expansion Anchors the Bullish Thesis
AWS delivered 28% year-over-year expansion in Q1 2026, generating $37.6 billion in revenue and surpassing Wall Street’s consensus estimate of $36.64 billion while achieving its most robust growth velocity in over three years. CEO Andy Jassy characterized it as the “fastest growth in 15 quarters.”
Amazon’s contracted revenue pipeline reached $364 billion as of March 31. This figure excludes Anthropic’s pledge to allocate over $100 billion toward AWS services throughout the coming decade.
Company-wide, Q1 2026 revenue totaled $181.5 billion, representing 17% year-over-year growth, with operating income reaching $23.9 billion. Amazon exceeded Wall Street’s earnings per share forecast of $1.64, delivering $2.78 per share.
Amazon has indicated plans to deploy approximately $200 billion toward capital investments in 2026, predominantly allocated to AWS infrastructure expansion. This substantial spending constrains near-term profitability, partially explaining why the stock appears expensive on a forward price-to-earnings basis despite robust underlying momentum.
The Valuation Conversation
The equity currently trades at approximately 27 times forward earnings, exceeding Microsoft and Nvidia at 18-20 times and Meta at 17. Even the Nasdaq 100 index at roughly 24 times appears more attractively priced using this metric.
However, Morgan Stanley has previously highlighted that Amazon trades at a significant discount relative to competitors when projected profit expansion is incorporated into the analysis.
Bank of America assigns Amazon a Buy rating with a $310 price objective, constructed primarily using a sum-of-the-parts methodology that attributes the majority of the company’s value to AWS. The firm also projects Amazon Prime Day will produce roughly $22 billion in sales and anticipates Q2 revenue will meet or exceed the upper range of management guidance.
Not all investors share this enthusiasm. Berkshire Hathaway reduced its Amazon stake from 10 million shares to essentially nothing according to its latest regulatory filing. Stanley Druckenmiller’s Duquesne Family Office slashed its common stock holdings by approximately 94%, though he concurrently doubled his call option position on the stock from 100,000 to 200,000 shares.
Institutional investors collectively added 253 million Amazon shares during the most recent quarter, according to Quiver Quantitative analytics.
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