Amazon's Undervalued Moment: Why Ackman's Contrarian Bet Could Pay Off Big

The tech world is abuzz with whispers of a slowdown. Amazon’s stock has slumped nearly 30% since early 2024, dragged down by fears over China’s AI ambitions, tariff-induced supply chain strains, and Wall Street’s obsession with short-term metrics. But amid the panic, one contrarian investor has been quietly buying: Bill Ackman’s Pershing Square. Their $X stake in Amazon, acquired during the recent dip, signals a bold bet on a company trading at its lowest valuation in a decade. This is the kind of opportunity that defines generational wealth—if you dare to look past the noise.

The Contrarian Play: Why Amazon’s Dip is a Buying Opportunity

The case for Amazon as a contrarian play hinges on two irrefutable facts: valuation and durability.

Valuation First: Amazon’s price-to-earnings (P/E) ratio has plummeted to 24.5—a historic low. To put this in perspective, . At this multiple, Amazon is cheaper than its Big Tech peers, despite owning the #1 cloud platform (AWS) and a retail empire that’s still expanding. Ryan Israel, Pershing’s CIO, called it “uniquely attractive,” and he’s right.

Durability Second: Amazon’s two-pronged business model—e-commerce dominance and AWS leadership—creates a moat that’s hard to breach. AWS holds over 40% of the cloud market, with annualized revenue exceeding $117 billion. . Even as rivals catch up, AWS’s infrastructure and AI partnerships (like its work with Anthropic’s new models) keep it ahead. Meanwhile, Amazon’s retail division is weathering tariffs better than competitors like Target, proving its pricing discipline and scale.

The Risks? Overblown. The Rewards? Underappreciated.

Critics will cite the usual suspects: tariffs, AWS capacity constraints, and macroeconomic uncertainty. But these risks are priced into the stock. Let’s dissect them:

1. Tariffs: While retailers like Target are scrambling to adjust to 25% tariffs on Chinese imports, Amazon has quietly diversified its supply chain. Unlike Target, which relies on big-box stores, Amazon’s fulfillment network gives it more flexibility. Plus, .

2. AWS Growth: AWS’s 17% revenue growth in Q1 2025 is solid, not slowing. The “capacity constraint” issue? It’s a temporary hurdle for a company that just spent $X on data centers.

3. The AI Race: Amazon’s partnership with Anthropic isn’t just about keeping up—it’s about owning a slice of the AI platform market. When other companies pay for access to Anthropic’s models, Amazon gets a cut.

The Math: 20% Earnings Growth at a 24.5x Multiple? A Steal

Pershing isn’t just betting on survival; it’s betting on sustained growth. Amazon’s Q1 results showed 10% revenue growth and 20% operating income growth—a mix that few companies can match. If Amazon can keep growing earnings at 20% annually (a pace it’s maintained for years), even a modest P/E expansion to 30 would send the stock soaring to $XXX.

The Street is already catching on. . While some are cautious (GuruFocus’s $186 target), the consensus $240.54 price tag implies a 17.7% upside from current levels. This isn’t just a “buy the dip” call—it’s a generational bet on a company that’s still in its prime.

The Bottom Line: Follow Pershing Square’s Lead—Now

When Bill Ackman loads up on a stock that’s been beaten down, it’s a signal. Amazon’s dip is no accident—it’s a function of short-term fears and long-term value colliding. The company’s fundamentals are stronger than its price suggests, and its valuation is a screaming buy for investors with a 5-10 year horizon.

Don’t let the noise drown out the opportunity. Amazon’s stock may have dropped, but its empire hasn’t. This is the moment to act—before the crowd catches on.