TLDR
- Bill Ackman invested $1.2 billion in Amazon stock during Q2 2025, purchasing 5.82 million shares as his fund’s only new buy
- Amazon stock trades near all-time highs at $228 per share, just 6% below its February peak of $242.52
- AWS cloud division generated $30.9 billion in Q2 revenue with 17.5% year-over-year growth and maintains 37% operating margins
- Amazon’s advertising business exploded 22% to over $60 billion annualized revenue, becoming a major profit driver
- Analysts project Amazon could reach $300 per share within two years through mid-teens earnings growth
Billionaire investor Bill Ackman made Amazon his biggest new investment in the second quarter of 2025. The hedge fund manager deployed $1.2 billion to purchase 5.82 million Amazon shares through his Pershing Square Capital Management fund.
This represented Ackman’s only new stock purchase during Q2. He funded the Amazon buy by selling his entire stake in Canadian Pacific railway company. The investment now represents 9.3% of his $13.7 billion portfolio.
Ackman had previously called Amazon one of his “most admired” companies but avoided buying due to high valuations. The opportunity came when Amazon shares dropped over 30% earlier in 2025 amid concerns about AI hype and potential tariffs under President Trump.
The timing proved smart as Amazon stock has since recovered strongly. Shares now trade at $228, approaching the all-time high of $242.52 reached in February. This puts the stock just 6% below its peak performance.
Strong Financial Performance Drives Recovery
Amazon delivered solid second-quarter results that justified investor confidence. Total revenue climbed 13% year-over-year to $167.7 billion. Operating income surged 31% to $19.2 billion, showing improved efficiency across the business.
The company’s diversified revenue streams all showed healthy growth. North American e-commerce sales reached $100.1 billion, up 11% from the previous year. This growth came despite concerns about consumer spending and tariff impacts.
Prime membership continues driving e-commerce success with 240 million global subscribers. Amazon has expanded same-day delivery options while using robotics and inventory optimization to cut fulfillment costs. Third-party sellers now account for 60% of total marketplace sales.
Amazon Web Services remains the crown jewel with $30.9 billion in quarterly revenue. The cloud division posted 17.5% growth and maintains operating margins around 37%. AWS accounts for roughly 53% of Amazon’s total operating profits despite representing only 18% of revenue.
Advertising Emerges as Major Growth Engine
Amazon’s advertising business has become a standout performer with explosive growth. Revenue jumped 22% to reach over $60 billion on an annualized basis. The advertising segment now represents more than 9% of total company sales.
The advertising platform leverages Amazon’s vast customer data across Prime Video, Twitch, and sponsored product listings. AI enhancements are boosting return on investment for advertisers while improving targeting capabilities. This creates higher profit margins that are less tied to retail sales volumes.
Management highlighted advertising as “an important contributor to profitability” in both North American and international segments. The business benefits from Amazon’s massive customer base and shopping intent data that competitors cannot easily replicate.
Healthcare services through Amazon Clinic and entertainment content like Thursday Night Football on Prime Video provide additional revenue diversification. These newer ventures help reduce dependence on traditional retail operations.
Analysts See Clear Path to $300
Wall Street analysts maintain bullish outlooks with a median price target of $264 per share. This implies 15% upside from current levels around $228. Some projections suggest Amazon could reach $300 within two years.
The path to $300 relies on continued mid-teens earnings growth driven by higher-margin businesses. Current trailing twelve-month earnings per share stand at $6.55, up from $4.18 a year earlier. At a 15% compound annual growth rate, earnings could reach $8.70 within two years.
Maintaining the current price-to-earnings ratio of 35 times would support a $300 stock price. This scenario assumes no valuation premium expansion, relying purely on earnings growth to drive stock appreciation.
Amazon has earmarked $100 billion for AI infrastructure investments in 2025. These capital expenditures support AWS growth in generative AI tools like Bedrock and custom chips including Graviton and Trainium processors. Analysts project AWS could generate $86 billion in operating profits by 2030.
Ackman’s investment thesis centers on Amazon’s “moat-protected” dual advantages in e-commerce and cloud computing, both now enhanced by artificial intelligence capabilities.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
