Billionaire investor Bill Ackman made a bold $1.2 billion move into Amazon during Q2 2024, marking his sole new position while maintaining his massive Uber stake. The Pershing Square founder capitalized on Amazon’s temporary dip, seeing long-term value in the tech giant’s diversified business model. This concentrated bet reflects Ackman’s signature strategy of backing high-conviction picks with massive capital deployment.
- Ackman funded the Amazon purchase by liquidating Canadian Pacific shares, calling the exit 'with regret' but prioritizing Amazon's superior growth prospects and AI potential
- Amazon's AWS cloud division generated $30.9B in Q2 revenue (up 17.5% YoY) and represents 53% of profits, with $100B earmarked for AI infrastructure through 2025
- The investment represents 9.3% of Pershing Square's $13.7B portfolio, making it the second-largest position behind Uber despite being acquired just one quarter prior
Ackman's Strategic Pivot to Amazon
Bill Ackman, the founder of Pershing Square Capital Management, has built his reputation on making concentrated, high-conviction bets rather than diversifying across numerous positions. His investment philosophy prioritizes quality management and long-term competitive advantages over broad market exposure. This approach was evident in his Q2 2024 move when he deployed $1.2 billion to acquire 5.82 million shares of Amazon.com (NASDAQ:AMZN), making it the fund’s only new position while maintaining his massive $2.8 billion stake in Uber Technologies (NYSE:UBER). The Amazon purchase represented a significant strategic shift, funded by liquidating shares of Canadian Pacific (NYSE:CP) – a move Ackman described as being made ‘with regret’ but necessary to capitalize on what he perceived as a superior opportunity.
The timing of Ackman’s Amazon investment was particularly noteworthy. He entered the position during a period when Amazon’s shares had declined over 30% from the start of the year, hammered by concerns about generative AI hype fading and potential U.S. tariffs under President Trump. This temporary weakness created what Pershing Square’s Chief Investment Officer Ryan Israel described as the ‘most substantial move’ of the quarter, betting on Amazon’s earnings resilience despite market fears. By the end of Q2, the position had grown to $1.3 billion, representing 9.3% of Pershing Square’s $13.7 billion portfolio and making it the second-largest holding behind Uber despite being acquired just one quarter prior.
The Investment Thesis Behind Amazon
Ackman’s conviction in Amazon stems from what he views as the company’s ‘moat-protected’ duality: its unbeatable e-commerce scale combined with AWS’s cloud dominance. Amazon had long been on Pershing Square’s ‘most admired’ list, but the fund had considered it too expensive until the Q2 dip created an attractive entry point. The investment thesis centers on CEO Andy Jassy’s efficiency drive, which Ackman believes will drive profit margin expansion alongside robust revenue growth. In a potential tariff-heavy environment, Amazon’s scale provides protection, with AWS being less exposed to trade wars than retail imports.
The core of Amazon’s strength lies in its diversified business model. The AWS cloud division generated $30.9 billion in Q2 revenue, representing 17.5% year-over-year growth and accounting for approximately 53% of profits despite growing capital expenditures. With $100 billion earmarked for AI infrastructure through 2025, AWS is positioned to capitalize on insatiable demand for generative AI through tools like Bedrock and custom chips (Graviton, Trainium), giving it cost-efficiency advantages over rivals. Analysts project 18% compounded annual growth through 2030, potentially yielding $86 billion in operating profits from AWS alone.
Amazon’s e-commerce business, the company’s foundation, grew 11% in North America to $100.1 billion, bolstered by Prime’s 240 million subscribers and same-day delivery expansions. Inventory optimization and robotics in fulfillment centers have significantly reduced costs, while third-party sellers – now representing 60% of sales – continue to drive marketplace vitality. The advertising division has emerged as a sleeper hit, with sales exploding 22% to over $60 billion annualized, leveraging shopper data for targeted ads across Prime Video, Twitch, and sponsored products.
Current Valuation and Future Prospects
As of current trading levels, Amazon sits at around $228 per share, just 6% below its all-time high of $242.52 reached in February. Despite this proximity to previous peaks, the stock remains attractive to patient investors according to Wall Street analysts. The median price target hovers at $264, implying 15% upside potential from current levels. This optimism is fueled by Amazon’s diversified engines operating at peak efficiency, as demonstrated by second-quarter earnings that showed total revenue surging 13% to $167.7 billion with operating income reaching $19.2 billion.
The combination of AI-fueled AWS growth, optimized retail operations, and advertising dominance positions Amazon for 15% to 20% annual earnings growth through the coming years. Trading at approximately 34x 2025 earnings estimates, the valuation appears reasonable given the company’s growth trajectory and market position. Additional revenue streams from healthcare (Amazon Clinic) and entertainment (Thursday Night Football on Prime) further diversify the company’s income sources, with total revenue projected to reach $1.15 trillion by 2030.
For investors considering following Ackman’s lead, Amazon represents a resilient blue-chip stock that blends growth and stability, making it ideal for long-term investors betting on technology’s future. The current valuation, while near all-time highs, may represent a compelling entry point before what many analysts believe will be the next leg up driven by AI adoption, cloud expansion, and continued e-commerce dominance. Ackman’s move during a period of temporary fear demonstrates his confidence that Amazon’s fundamental strengths outweigh short-term market concerns.
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