This Billionaire Was Scooping Up Shares of Amazon and Alphabet in Q2. Should Investors Follow Suit and Buy the Stocks?

Bill Ackman's Pershing Square Capital made significant Q2 investments, establishing a new large position in Amazon and increasing its Alphabet stake, a notable move given his concentrated portfolio. The article underscores both companies' strategic leverage of AI: Amazon is deploying AI to enhance e-commerce efficiency, boost advertising, and drive AWS growth, which saw 17.5% revenue increase to $30.9 billion. Similarly, Alphabet is using AI to accelerate Google Search revenue, up 12% to $54.2 billion, and propel Google Cloud's 32% revenue growth, positioning both as AI-driven leaders with strong financial performance.

Analysis

A significant Q2 portfolio adjustment by Pershing Square Capital, a hedge fund known for its concentrated bets, involved initiating a substantial 9.3% position in Amazon and increasing its Alphabet stake by 8.6%, making them the fund's fifth and third-largest holdings, respectively. This signals strong conviction in both mega-cap tech firms, driven by their successful integration of artificial intelligence to bolster core operations and create new growth vectors. For Amazon, AI is enhancing operating leverage, evidenced by its North American segment's operating income climbing 16% on an 8% revenue increase, and by fueling its high-margin advertising unit, which saw 23% revenue growth. Its AWS division remains a key driver, with revenue up 17.5% to $30.9 billion, supported by a comprehensive AI stack and custom chips like Trainium and Inferentia. Similarly, Alphabet has effectively countered threats to its search dominance, accelerating Google Search revenue growth to 12% at $54.2 billion, while Google Cloud has hit an inflection point, with revenue jumping 32% and operating income more than doubling. Both companies are leveraging proprietary hardware to create cost and performance advantages in the competitive AI landscape. Despite both being positioned as AI leaders, the report highlights a valuation disparity, with Alphabet trading at a more modest 19 times 2026 consensus earnings compared to Amazon's 30 times.

Key Decisions for Investors

• Investors should view Bill Ackman's substantial new and increased positions as a strong institutional endorsement of the AI-driven growth narratives for both Amazon and Alphabet.
• Consider the distinct investment theses: Amazon offers AI-enhanced e-commerce and dominant cloud infrastructure, while Alphabet provides exposure to fortified search, a rapidly scaling cloud business, and long-term ventures like Waymo.
• Monitor key performance indicators like operating leverage in Amazon's North American business and Google Cloud, as these metrics directly reflect the profitability of their AI investments.
• Given the valuation gap noted in the report, investors may find Alphabet's forward P/E of 19 relatively more attractive compared to Amazon's forward P/E of 30, suggesting a potentially more favorable risk-reward profile.