Major Hedge Funds Are Accumulating Amazon Shares, Citing AI Valuation Gap

Prominent Investors Bet on Amazon's Relative Value in the AI Landscape

Some of Wall Street's most closely watched hedge funds have been quietly building up their positions in Amazon (NASDAQ: AMZN) as of mid-2026, with major players like Bill Ackman's Pershing Square and Appaloosa Management among those reportedly increasing their stakes. The underlying rationale, analysts suggest, centers on Amazon's comparatively modest valuation against the broader universe of artificial intelligence and cloud computing stocks.

The Valuation Case for Amazon

To understand why institutional investors are gravitating toward Amazon, it helps to look at where its peers are trading. Nvidia (NASDAQ: NVDA) currently commands a price-to-sales ratio of approximately 18 times trailing revenue, while Intel (NASDAQ: INTC) trades at around 12 times sales. Both companies are more directly tied to AI hardware and infrastructure, and their premium valuations reflect that market enthusiasm.

Amazon, by contrast, trades at just 3.4 times sales — a fraction of what pure-play AI names fetch in today's market. Its forward and trailing price-to-earnings ratios are hovering near 30, and the stock has remained essentially flat in 2026, gaining just over 7% over the past 12 months as of late June.

This pricing dynamic stems in large part from Amazon's hybrid business structure. While Amazon Web Services (AWS) is one of the world's leading cloud computing platforms and a direct beneficiary of AI infrastructure spending, the company also operates one of the globe's largest e-commerce businesses. That diversification tends to dampen the valuation multiples investors assign to Amazon relative to more narrowly focused technology peers.

AWS and the AI Infrastructure Push

Amazon's cloud division has become increasingly central to the company's growth narrative as enterprise demand for AI compute capacity accelerates. AWS competes directly with Microsoft Azure and Google Cloud in the race to capture AI workloads, and the division continues to be a significant driver of operating income.

However, Amazon's ambitions in AI come with a substantial price tag. The company has projected capital expenditures of roughly $200 billion on AI infrastructure in 2026 alone — a figure that represents one of the most aggressive spending commitments in the industry. This level of investment reflects the scale of opportunity management sees, but it also introduces meaningful near-term risk to free cash flow and profitability metrics.

What Heavy Capex Means for Investors

The $200 billion AI infrastructure spend is perhaps the most significant variable for analysts monitoring Amazon's financial trajectory. Heavy capital expenditure cycles can compress margins and delay the timeline for returns on investment, particularly when competitive pressure from rival cloud providers remains intense.

Data suggests that Amazon's diversified revenue base — spanning retail, third-party marketplace services, advertising, and AWS — provides a degree of financial cushion that more narrowly focused AI companies may lack. Analysts note that this breadth allows the company to absorb large capital commitments while maintaining operational stability across business segments.

The competitive landscape in cloud and AI infrastructure remains fierce, with Microsoft, Google, and a growing number of specialized providers all vying for enterprise contracts. How effectively Amazon deploys its AI capital investment will likely be a key determinant of long-term performance.

What to Watch Going Forward

For market observers tracking Amazon's institutional ownership trends, several metrics are worth monitoring in the coming quarters. AWS revenue growth rates, AI-related capex updates, and any margin trajectory shifts will be closely scrutinized by analysts as indicators of whether the heavy infrastructure spending is translating into durable competitive advantages.

The interest from high-profile hedge funds adds a layer of narrative to Amazon's investment story, though institutional positioning can shift quickly depending on macro conditions and earnings results. Amazon's next earnings reports will likely offer clearer visibility into how the company's AI infrastructure investments are progressing and whether the valuation gap relative to peers is beginning to close.