Palantir Billionaire Peter Thiel Buys an AI Stock Up 560% in 10 Years (Hint: Not Nvidia)

Amazon’s Q2 results were strong: revenue rose 20% to $201B and operating income increased 43% to $28B, with AWS revenue up 37%—its fastest growth in 18 quarters. The article highlights accelerating AI monetization (AWS AI workloads, proprietary AI agents, and Trainium chips) and cites Morgan Stanley’s view that AWS could reach $1T by 2035 (~21% annual growth). Despite concern over capex rising to a projected $220B this year (from $128B last year), management expects revenue growth to eventually outpace incremental capex, supporting free cash flow and returns on invested capital. Wall Street sees the stock as undervalued, with a median 12-month target price of $330 vs. $255 (about 32% upside).

Analysis

The key mechanism is not “AI growth” but conversion of capex into a widening operating moat. If AWS can keep reaccelerating while fulfillment automation lowers unit costs, AMZN moves from a narrative of heavy reinvestment to one of self-funding scale, which supports both margin expansion and a multiple re-rate. The market still tends to value AMZN as a low-margin retailer-plus-cloud hybrid; the setup here is that the cloud mix and internal automation can compound together, making the retail segment look more like an annuity with improving labor leverage.

Second-order, this is more threatening to legacy retailers than to the obvious AI beneficiaries. TGT remains exposed to a world where AMZN uses robotics and software to compress delivery times and price gaps faster than brick-and-mortar can respond; the risk is not lost market share overnight, but incremental share bleed and promo pressure over the next 2-4 quarters. On the AI hardware side, NVDA is still a structural winner, but AMZN’s custom silicon trajectory raises the odds that some inference demand is captured in-house, limiting upside asymmetry versus the broader AI basket.

The contrarian point is that the consensus may be underestimating how quickly capex can become a free-cash-flow tailwind once utilization inflects. The bearish version of this story only works if AWS growth falls back toward mid-20s or capex remains elevated without visible margin conversion; that is the falsifier to watch over the next two earnings prints. If AWS growth stays above trend, AMZN likely outperforms on both earnings revisions and duration-sensitive multiple expansion, while TGT remains a cleaner relative short than NVDA.

Key Decisions for Investors

• Long AMZN on any post-rally consolidation; 3-6 month thesis is earnings revisions plus FCF inflection if AWS growth stays elevated. Risk/reward improves if the stock revisits the low-$250s rather than chasing strength.
• Pair trade: long AMZN / short TGT as a relative retail efficiency spread. Expect the gap to widen over 1-3 quarters if fulfillment automation keeps lowering AMZN’s cost-to-serve while TGT faces ongoing traffic and margin pressure.
• Do not add to NVDA here purely on this read-through; treat AMZN’s Trainium and proprietary AI stack as a medium-term share-of-wallet risk to incremental spend. Reassess only if NVDA continues to print accelerating data-center backlog without pricing pressure.
• Watch the next two AWS prints as the key catalyst window. If AWS growth decelerates materially or capex keeps climbing without operating margin improvement, take profits on AMZN and fade the bull case.