2 Billionaire Investors Own Amazon Stock. Should You Buy It Too? | The Motley Fool

Legendary investors are focusing on the long-term opportunity in cloud and advertising. Both Bill Ackman and David Tepper have held considerable positions in Amazon (AMZN 0.21%), one of the most influential companies of the digital era. These aren't short-term traders. They look for solid businesses to hold over many years. But here's the real question: Does their interest mean Amazon stock is a buy today? Let's take a closer look. At first glance, Amazon still looks like an e-commerce company. At least, that's where most consumers have used its services -- but that's only part of the story. Today, Amazon has three major engines: cloud computing, advertising, and retail. Amazon Web Services (AWS) is the company's profit backbone. To put it into perspective, cloud computing accounted for 57% of Amazon's 2025 operating income of $80 billion. It is also one of the fastest-growing segments, delivering 20% growth in 2025 as a result of rising demand for artificial intelligence (AI) workloads. Businesses are building AI tools, and they need computing power to run them. AWS provides that infrastructure. Here, the opportunity is massive. Instead of competing directly with consumer AI apps, Amazon is taking a quieter approach by selling the tools (to businesses) that power them. That's a position that will benefit regardless of who wins the AI race. Amazon's ad business has quietly become one of its fastest-growing segments. Annual revenue has already crossed $60 billion and continues to grow at double-digit rates. What makes Amazon's ads powerful is their ability to target intent. When users search on Amazon, they're usually ready to buy, making Amazon ads more effective than other digital ad formats. And now, Amazon is expanding beyond its own marketplace. Ads are showing up across Prime Video and even third-party platforms through its demand-sideplatform, giving Amazon a much broader footprint in the digital advertising market. While this is no longer the business that garners the most excitement, it's still important to put things into perspective. Amazon is still the largest e-commerce platform, generating $426 billion of sales in the U.S. and another $162 billion internationally. It has massive advantages: fast delivery, a massive product selection, and more than 200 million Prime members worldwide. That scale continues to feed data into Amazon's other businesses, especially its advertising business. Put together, Amazon isn't just one business. It's a sustainable, growing ecosystem, which is probably why legendary investors like Ackman and Tepper are interested in it. Even great companies come with trade-offs. First, retail growth is slowing. In recent quarters, Amazon's core e-commerce business has grown in the single digits. That's not surprising given its size, but it does mean retail is no longer the main driver of growth. Competition is also heating up. Companies like Temu and Shein are attracting price-sensitive shoppers with ultra-low-cost offerings, especially in categories like apparel and home goods. Second, Amazon is spending heavily on artificial intelligence. The company is investing $200 billion in 2026 into data centers, chips, robotics, and infrastructure to support its AI ambitions. While this could pay off over time, it may pressure margins and free cash flow in the short term. Investors should expect some volatility as these investments scale. It's tempting to buy a stock just because billionaires own it. But that's not an ideal approach. Investors like Ackman and Tepper think in years, not quarters. They're willing to hold through volatility because they focus on long-term business strength. So the better question is: Do you see the same long-term potential, and do you have the same conviction and risk appetite to hold for years? You might consider buying Amazon if you believe its cloud business will continue expanding, its advertising segment will keep improving margins, and its ecosystem will remain difficult to replicate. On the other hand, you might want to pause if you are concerned about near-term risks, such as heavy spending or competitive pressure. Amazon isn't the fast-growing company it once was. But it may be a better business than ever. With strong positions in cloud computing, advertising, and global e-commerce, the company has multiple avenues for growth, albeit at a lower rate than in the past. Ackman and Tepper appear to be betting on that long-term story. Whether you should do the same depends on your time horizon and your willingness to ride out the ups and downs along the way.