Cathie Wood and Warren Buffett Both Own This Artificial Intelligence (AI) Stock. Time to Buy?

Amazon reported robust Q3 2025 financial results, with revenue increasing 13% to $180.2 billion and earnings rising 38.6% to $21.2 billion, significantly aided by a $9.5 billion gain from its Anthropic investment. Amazon Web Services (AWS) continued its strong performance with 20% revenue growth, and CEO Andy Jassy emphasized robust AI demand driving substantial infrastructure expansion. Despite one-time charges affecting North American and International operating income, the market responded positively, pushing the stock to a new all-time high, as investors, including Cathie Wood and Warren Buffett, increasingly view Amazon as a compelling, yet comparatively undervalued, AI contender.

Analysis

Amazon reported robust Q3 2025 results, with total revenue increasing 13% year-over-year to $180.2 billion and earnings surging 38.6% to $21.2 billion, significantly aided by a $9.5 billion gain from its Anthropic investment. Amazon Web Services (AWS) revenue grew 20%, driven by strong demand for AI and core infrastructure, with CEO Andy Jassy announcing plans to double power capacity by 2027. This highlights AWS's critical role as an AI growth engine for the company.

Operational nuances included one-time charges impacting segment profitability; North America's operating income decline was due to a $2.5 billion FTC legal settlement, which, if excluded, would show a 28% increase. International segment operating income was affected by severance costs from layoffs, though future cost savings are anticipated. Wall Street largely discounted layoff concerns, focusing instead on the positive Q4 revenue guidance of $206 billion to $213 billion.

The market reacted bullishly to the strong guidance and AWS commentary, propelling AMZN shares to a new all-time closing high of $244.22 on October 31. Noteworthy investors Cathie Wood and Warren Buffett continue to hold Amazon, perceiving it as an undervalued AI contender. Amazon currently trades at a forward P/E of 28.5, a discount compared to Microsoft's 33x, suggesting potential for valuation expansion if AWS growth continues or AI monetization opportunities materialize.

Key Decisions for Investors

• Monitor AWS's continued growth and infrastructure expansion, particularly its AI-driven demand, as this remains a primary catalyst for Amazon's long-term valuation.
• Assess Amazon's current valuation, noting its forward P/E of 28.5 relative to peers like Microsoft, and consider the potential for a market re-rating as one-time operational headwinds subside.
• Track developments and monetization strategies related to Amazon's investment in Anthropic, as this partnership could unlock significant future AI-driven revenue streams and further boost earnings.