Key Takeaways
- Elite hedge funds such as Appaloosa, Baupost, and Pershing Square have aggressively increased their Amazon stakes, with several designating it as their top position.
- Amazon shares have climbed only 1.5% in 2026 and roughly 3.4% over the past year, significantly trailing artificial intelligence-focused competitors.
- Amazon Web Services posted 28% year-over-year expansion in Q1 2026, reaching $37.6 billion—the division’s strongest growth pace in over three years.
- ARK Investment Management, led by Cathie Wood, acquired 41,141 Amazon shares valued at approximately $9.6 million on June 23.
- Bank of America analysts maintain their Buy recommendation with a $310 price objective for Amazon shares.
Amazon (AMZN) shares have advanced merely 1.5% year-to-date, trailing the broader S&P 500 index by a considerable distance. This performance gap is precisely what’s attracting some of Wall Street’s most prominent 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 essentially from nothing over the previous twelve months, now holding approximately $2.4 billion worth—making it the fund’s second-biggest investment.
Sanders Capital, established by former AllianceBernstein chief Lewis Sanders, increased its Amazon holdings to 29.8 million shares during Q1 2026, representing roughly $6.2 billion after doubling down on the position.
On June 23, Cathie Wood’s ARK Investment Management purchased 41,141 Amazon shares worth around $9.6 million at a closing price of $234.27. This purchase occurred amid a widespread technology sector downturn that particularly impacted semiconductor and AI-focused stocks.
The unifying theme driving these purchases centers on a sum-of-the-parts valuation thesis. ValueWorks founder Charles Lemonides estimates that AWS alone justifies approximately half of Amazon’s $2.5 trillion valuation, with the retail operations comprising the remaining half. Under this framework, segments including advertising, digital media, and streaming services are essentially valued at zero.
“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 Acceleration Drives Investment Thesis
Amazon Web Services expanded 28% year-over-year during Q1 2026, generating $37.6 billion in revenue—surpassing analyst expectations of $36.64 billion and marking the segment’s most robust expansion in over three years. CEO Andy Jassy characterized it as the “fastest growth in 15 quarters.”
Amazon’s contracted revenue backlog reached $364 billion as of March 31. This substantial figure excludes Anthropic’s commitment to allocate over $100 billion to AWS infrastructure throughout the coming decade.
Consolidated Q1 2026 revenue totaled $181.5 billion, reflecting 17% year-over-year growth, while operating income reached $23.9 billion. Amazon delivered earnings per share of $2.78, substantially exceeding Wall Street’s $1.64 consensus estimate.
Amazon has indicated plans to deploy approximately $200 billion in capital expenditures during 2026, predominantly focused on AWS infrastructure expansion. This aggressive investment strategy suppresses near-term profitability metrics, contributing to elevated forward P/E multiples despite strong underlying revenue momentum.
Valuation Analysis
The stock currently commands approximately 27 times forward earnings, exceeding both Microsoft and Nvidia at 18-20 times multiples and Meta at 17 times. Even the Nasdaq 100 index appears more attractively valued at roughly 24 times forward earnings.
However, Morgan Stanley analysts have previously highlighted that Amazon trades at a substantial discount relative to comparable companies when adjusting for anticipated profit growth rates.
Bank of America maintains its Buy rating with a $310 price target, primarily based on sum-of-the-parts valuation methodology that attributes the majority of enterprise value to AWS. The firm also projects Amazon Prime Day will deliver approximately $22 billion in sales and anticipates Q2 revenue will reach or exceed the upper bound of company guidance.
Not all institutional investors share this optimism. Berkshire Hathaway reduced its Amazon holdings from 10 million shares to essentially zero according to recent regulatory filings. Stanley Druckenmiller’s Duquesne Family Office slashed its common stock position by approximately 94%, though he concurrently doubled his call option exposure from 100,000 to 200,000 shares.
Institutional investors collectively added 253 million Amazon shares during the most recent quarter, according to Quiver Quantitative tracking data.
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