Billionaires Sell Amazon Stock and Buy a Quantum Computing Stock Up 3,050% Since 2023

Three prominent hedge fund managers (Israel Englander, Ken Griffin, Steven Schonfeld) materially trimmed Amazon positions in Q3—selling 787,900 (−17%), 1.6M (−35%), and 253,700 (−72%) shares respectively—while adding small stakes in quantum‑computing company Rigetti (RGTI). Amazon reported Q3 revenue up 13% to $180 billion and, excluding one‑time charges, operating income rose 25% to $21.7 billion; AWS and advertising drove growth, Rufus is on pace for ~$10 billion in sales, and consensus expects ~18% EPS CAGR with the stock trading ~32x earnings. By contrast Rigetti has rallied ~3,050% since Jan‑2023 despite YTD revenue of $5 million, a net loss of $198 million, 71% share dilution year‑over‑year and a valuation near 860x sales; the buys appear momentum‑driven rather than conviction trades given small position sizes.

Analysis

Market structure: Amazon (AMZN) is a clear winner from the AI wave — Rufus (~$10bn run-rate) plus >1,000 internal gen‑AI tools and AWS product expansion underpin a 13% revenue growth and operating‑income growth of 25% last quarter, supporting pricing power in cloud and advertising vs. smaller retailers and legacy IT services which are likely losers. Rigetti (RGTIW) is a momentum microcap winner for speculators but a loser for long-term fundamental holders: 860x sales, $5m YTD revenue, $198m net loss, and shares +71% YoY point to dilution and binary equity risk. Cross-asset: stronger tech flows should tighten high‑grade spreads and lift NVDA implied vols; speculative quantum moves raise single‑name equity and options gamma, while USD flows may strengthen on risk‑on rotation to large‑cap tech.

Risk assessment: Tail risks include AI regulatory/antitrust action against Amazon or a US‑China tariff shock disrupting supply chains — both could compress a 32x PE rapidly; for RGTIW, bankruptcy or heavy equity raises are plausible within 12–24 months given cash burn. Time horizons: days–weeks = momentum swings and options gamma; months = quarterly AWS/ad revenue beats or misses; years = multi‑year AI adoption (18% EPS CAGR consensus) vs. 10–20 year timeline for quantum utility. Key catalysts: AMZN earnings and AWS product launches (next 1–3 quarters), Rigetti technical milestones/partner announcements or capital raises (next 6–12 months).

Trade implications: Core overweight AMZN for 12–36 month alpha given repeatable AI monetization; use covered calls to harvest yield vs. outright long. Tactical short or put spreads on RGTIW sized small (<1% portfolio) to capitalize on valuation and dilution risk — avoid naked short due to high gamma. Pair trade: long AMZN (2%) vs short RGTIW (1%) to express quality vs momentum; rotate 2–4% into NVDA/MSFT to play AI infra demand.

Contrarian angles: Consensus momentum buys in RGTIW underprice dilution and financing risk; the market may be underpricing sustained revenue leverage at AMZN from AI (if Rufus scales past $20bn in 24–36 months). Historical parallel: speculative hardware themes (early GPU, crypto miners) produced violent short squeezes then collapses — size positions accordingly. Unintended consequence: aggressive shorting of RGTIW can trigger squeeze; cap exposure and use spreads.

Key Decisions for Investors

• Establish a 2–3% portfolio core long in AMZN (12–36 month horizon); scale in over 2–6 weeks and add up to 1% more on any pullback >8% or if forward PE falls to ≤28; hedge by selling 3–6 month covered calls at a 10–15% OTM strike to generate income.
• Initiate a tactical 0.5%–1.0% position short RGTIW via 3–6 month put spreads (buy 1 put / sell 2 lower strike puts or equivalent) to limit gamma; increase to 2% only if Rigetti issues equity >15% dilution within 6–12 months or misses a revenue/milestone update, profit target 40%, stop-loss 50% adverse move.
• Implement a pair trade: long AMZN 2% vs short RGTIW 1% (dollar neutral) to capture quality/momentum dispersion; rebalance monthly and close the pair after 6–12 months or if the spread widens by 25% in AMZN’s favor or RGTIW falls 50%.
• Rotate 2–4% from cyclical retail into AI infrastructure: allocate 1–2% to NVDA and 1–2% to MSFT (or equivalent ETFs) over next 4 weeks to capture secular AI compute demand; take profits if NVDA outperforms by >50% from entry or if semiconductor cyclicals show inventory normalization signals.