Workflow
This Billionaire Was Scooping Up Shares of Amazon and Alphabet in Q2. Should Investors Follow Suit and Buy the Stocks?
The Motley Foolยท2025-08-23 20:07

Group 1: Bill Ackman's Investment Activity - Bill Ackman, through Pershing Square Capital, initiated a new position in Amazon by acquiring 5.8 million shares, making it the fund's fifth-largest holding, accounting for 9.3% of its value as of August 14 [3][2] - The hedge fund also increased its stake in Alphabet by 925,000 shares, raising its total holdings to almost 10.8 million shares, which represents 15% of the fund's value as of August 14 [9][2] Group 2: Amazon's Business Performance and AI Integration - Amazon's logistics network is enhanced by artificial intelligence (AI) and robotics, optimizing delivery routes and improving warehouse stocking efficiency [4] - The company employs over 1 million robots in its fulfillment centers, which are managed by its Deepfleet AI model, leading to reduced returns and faster shipping times [5] - Amazon's advertising revenue grew by 23% last quarter, driven by AI tools that help merchants create better product listings and ad campaigns [6] - The North American segment's revenue rose 8% while operating income increased by 16%, indicating strong operating leverage [7] - Amazon Web Services (AWS) remains the most profitable segment, with revenue climbing 17.5% last quarter to $30.9 billion, supported by AI-driven services [8] Group 3: Alphabet's Business Performance and AI Integration - Alphabet's Google Search revenue grew by 12% year over year to $54.2 billion, despite concerns about AI chatbots impacting the business [10] - The company has integrated AI into its products, with over 2 billion users engaging with AI Overviews in Google Search [10] - Google Cloud's revenue surged by 32% in Q2, with operating income more than doubling, driven by its Gemini models and custom-designed tensor processing units (TPUs) [13] - Alphabet's competitive advantage is bolstered by its distribution network, with Chrome controlling two-thirds of the browser market and Android running over 70% of smartphones [12] Group 4: Valuation and Long-term Outlook - Amazon is trading at a forward price-to-earnings (P/E) ratio of about 30 based on analysts' consensus 2026 estimates, indicating an appealing investment opportunity [8] - Alphabet trades at just 19 times analysts' 2026 earnings estimates, suggesting it is attractively valued compared to its market leadership in various sectors [16] - Both Amazon and Alphabet are viewed as solid long-term investment opportunities, despite inherent risks [17]