Bill Ackman, David Tepper, and other billionaire fund managers are quietly piling into Amazon

Multiple high-profile hedge funds, including Tepper's Appaloosa, Klarman's Baupost, Gore's Generation, and Pershing Square, have been adding Amazon as they view the stock as cheap relative to its AI-driven fundamentals. AWS grew 28% to $37.6 billion in Q1 2026, while Amazon revenue rose 17% to $181.5 billion and operating income reached $23.9 billion, supporting the case for further upside despite a roughly 27x forward P/E. The article highlights a broad institutional buying trend, though Berkshire and Druckenmiller have reduced or hedged exposure.

Analysis

The key signal is not simply that AMZN is a favorite—it is becoming the preferred AI monetization vehicle for investors who want exposure without paying peak scarcity premiums for the obvious compute winners. If the market keeps rewarding “owned infrastructure plus demand capture,” AWS is the cleanest way to express the thesis because it monetizes both enterprise migration and model training usage while retaining optionality in ads and retail operating leverage.

The second-order effect is that AMZN’s muted share performance relative to the AI basket may be creating a catch-up trade as capital rotates from pure hardware beta into infrastructure with durable cash generation. That rotation is potentially bearish for names like NVDA and MU at the margin if portfolio managers fund AMZN by trimming higher-beta beneficiaries of the same cycle; it is also supportive for GOOGL/MSFT/META only insofar as they can defend their own capex intensity and cloud/AI attach rates.

The market’s main mistake may be overfocusing on near-term earnings dilution from capex rather than the conversion of capex into backlog, pricing power, and customer lock-in over 12-24 months. The risk is that AI spend normalizes faster than consensus expects, or that AWS growth decelerates once the current backlog is digested, which would expose AMZN’s elevated multiple versus slower-growth “value” peers. BRK.B’s reduction is less a thesis refutation than a reminder that AMZN is no longer a cheap obvious compounder; the trade works only if execution stays flawless.

Near term, the setup is more of a sentiment and positioning trade than a fundamentals surprise trade: the crowded long is still under-owned relative to the conviction level implied by the hedge fund endorsements. That creates room for continued inflows over the next 1-2 quarters, especially if AWS prints another acceleration and management refrains from any capex moderation language.

Key Decisions for Investors

• Go long AMZN vs. NVDA in a 3-6 month pair trade: AMZN should benefit from multiple re-rating and backlog visibility, while NVDA is more exposed to any digestion in AI capex cycles; size for a 1.5-2.0x upside if AWS growth re-accelerates and capex stays disciplined.
• Add AMZN call spreads for the next earnings window: buy 6-9 month upside exposure rather than common stock if the objective is to capture a potential sentiment re-rating while limiting downside from capex-driven multiple compression.
• Reduce exposure to the crowded hardware beneficiaries funded by hyperscaler spend, especially MU and INTC, on any further strength; their upside is more dependent on sustained buildout intensity, which is the most likely variable to mean-revert first.
• Long AMZN / short BRK.B as a relative quality-growth vs. value-agnostic reallocation trade: if the market keeps rewarding visible AI monetization and operating leverage, AMZN should outperform a capital-preservation benchmark over the next 6-12 months.
• For holders of MSFT or GOOGL, use AMZN strength as a hedge trigger: if AWS keeps accelerating while cloud peers do not, the market may begin to question relative share capture, making AMZN the cleaner expression of AI infrastructure beta.