Adam Spatacco, The Motley Fool
5 min read
In This Article:
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Buffett and Wood do not share the same investment philosophies, but both have Amazon in their portfolios.
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Ackman recently followed them, buying it on the dip in April.
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Ackman's position in Amazon complements his existing exposure to Alphabet.
Bill Ackman is a billionaire hedge fund manager as CEO of Pershing Square Capital Management. Unlike many of his peers on Wall Street, Ackman primarily keeps a tightly concentrated portfolio, with Pershing Square owning only about 10 stocks at any given time.
For the last couple of years, Pershing Square's most direct artificial intelligence (AI) investment has been a sizable position in Alphabet. Ackman has made it clear that its diversified ecosystem -- spanning internet search, cloud computing, advertising, cybersecurity, and more -- combined with an attractive valuation is what enticed Pershing Square to take a position in the "Magnificent Seven" member.
Well, just a few weeks ago, news broke that Pershing Square had recently initiated a position in another AI stock, Amazon (NASDAQ: AMZN). Ackman now joins Warren Buffett, whom he is known to admire, and Cathie Wood as prominent personalities on Wall Street who have exposure to Amazon, through their respective portfolios at Berkshire Hathaway and ARK Invest.
Let's explore what makes Amazon such a compelling AI stock for the long haul. I'll break down some trends in the business and the company's valuation to help explain why Amazon has earned the approval of Ackman, Buffett, and Wood.
Given how hot AI has become, investors may be challenged to identify which opportunities are best suited for long-term positions. What I mean by that is while semiconductor stocks or AI software businesses have risen in popularity over the last couple of years, it's hard to know which of these companies will continue to be a market leader in 10 years (or longer).
To me, Amazon is like the business version of a Swiss Army knife. The company's core segments are e-commerce and cloud computing infrastructure via Amazon Web Services (AWS).
But it also has a thriving advertising business and a growing subscription service (Amazon Prime), and it has even made some progress in the streaming and entertainment landscape.
Similar to Alphabet, Amazon is uniquely positioned to stitch its various operating units together through more AI-powered services. In essence, by leveraging the power of AI, it can bolster both the consumer and enterprise sides of its business and make the platform increasingly sticky for its customers.
