Why Top Investors Bet Big on Amazon Amid AI Boom

If you’ve ever wondered why some of the world’s most prominent hedge fund managers are snapping up Amazon shares, the reason might surprise you. Despite its seemingly lofty valuation, Amazon is increasingly viewed as an undervalued asset in the artificial intelligence (AI) sector. So, what’s driving this investment frenzy?

Investment Surge

Recently, a cadre of renowned money managers, including David Tepper and Seth Klarman, have significantly increased their stakes in Amazon. In fact, for Klarman and Tepper, Amazon has become their single largest holding. Even Bill Ackman, through his fund Pershing Square, has made Amazon his second-largest position, valuing his stake at approximately $2.4 billion.

Another notable player, Sanders Capital, doubled its Amazon stake in the first quarter of 2026. This move made the $6.2 billion investment its third-largest position. Yet, why the sudden rush towards Amazon, when its stock appears expensive at 27 times forward earnings, compared to peers like Microsoft and Nvidia

Value Hidden in Plain Sight

The intrigue lies in Amazon's business model and AI capabilities. While Nvidia and Intel have been enjoying significant stock increases, Amazon's share has risen modestly by just 3.4% year-to-date. However, Amazon Web Services (AWS), a core component of Amazon’s offering, recently posted its fastest growth in 15 quarters, with revenues climbing 28% in Q1 2026 to $37.6 billion.

Charles Lemonides, of ValueWorks, argues that the pieces of Amazon's business are worth more than the sum of its parts. With AWS potentially accounting for half of its $2.5 trillion market value, the rest of Amazon, including its rapidly growing advertising and media arms, could be seen as a bonus. Are investors missing out on a hidden goldmine by focusing solely on earnings multiples?

Crypto and Market Dynamics

So, what does this mean for the crypto space? Amazon's investment in AI and cloud infrastructure might have ripple effects. As AWS powers more AI projects, including those related to blockchain technologies and cryptocurrency developments, the potential for integration and innovation grows.

However, not everyone is convinced. Berkshire Hathaway significantly reduced its Amazon holdings, while investor Stanley Druckenmiller slashed his common-share position, focusing instead on call options. Could this indicate skepticism, or are these strategic reallocations?

In a momentum-driven market, the tug-of-war between excitement-driven buyers and cautious sellers defines the market. But for investors like Lemonides and Tepper, the potential for excitement in Amazon's future seems irresistible. Could it be that the real opportunity lies not in today's valuations but in tomorrow's potential?

For those keeping an eye on the convergence of AI and crypto, Amazon's strategic moves suggest a rising opportunity. Whether or not this translates into immediate gains, the broader implications for tech and finance are undeniable.