Should Retail Investors Follow Billionaire Bill Ackman's Q2 Moves in Amazon and Alphabet?

In Q2 2025, billionaire investor Bill Ackman made headlines by doubling down on Amazon (AMZN) and Alphabet (GOOGL), two tech giants at the forefront of the AI revolution. His hedge fund, Pershing Square, added $1.28 billion in Amazon shares and boosted its Alphabet stake by 21%, signaling a strategic bet on AI-driven growth. For retail investors, the question is clear: Should you follow Ackman's lead? Let's dissect the rationale behind these moves, evaluate the companies' AI-driven financials, and assess whether their valuations justify the risk.

Ackman's AI-Driven Bet: A Hedge Fund's High-Conviction Play

Ackman's Q2 2025 portfolio adjustments reflect a concentrated, long-term strategy. Amazon and Alphabet now account for 24.4% of his $13.7 billion fund, with Amazon's AWS and Alphabet's Google Cloud as the primary beneficiaries. This isn't a speculative gamble—it's a calculated alignment with the AI megatrend.

Amazon's AWS, the backbone of its profitability, reported $30.9 billion in Q2 revenue, up 17.5% year-over-year. Alphabet's Google Cloud surged even faster, hitting $13.6 billion in revenue, a 32% increase. Both companies are leveraging AI to dominate cloud infrastructure, with AWS's Tensor Processing Units (TPUs) and Alphabet's Gemini models enabling enterprises to scale AI workloads efficiently. Ackman's logic is simple: AI is the new electricity, and these two companies are the grid.

Valuation Metrics: Are Amazon and Alphabet Overpriced or Undervalued?

To evaluate whether Ackman's bets are sound, we must compare their valuations to growth potential.

• Amazon (AMZN):
• EV/EBITDA: 16.84 (as of Q2 2025), higher than the retail industry median of 10.76.
• P/S Ratio: 3.4, with a projected 15.95% upside.

• AWS EV/EBITDA: 15.4x, down from 19.5x in 2024, reflecting investor skepticism about growth pace.

• Alphabet (GOOGL):

• EV/EBITDA: 16.80, nearly identical to Amazon's.
• P/E Ratio: 20.3, lower than Amazon's 34.35, but with a $200 billion cash cushion.
• Google Cloud Operating Margin: 20.7% in Q2 2025, up from 9.4% in Q2 2024.

Both companies trade at a premium to their sectors, but their AI-driven revenue streams justify this. Amazon's AWS is projected to grow at 15% annually through 2030, while Alphabet's Google Cloud is on track to hit a $150+ billion run-rate by 2030. For context, the global AI market is expected to grow at a 35.9% CAGR, reaching $1.8 trillion by 2030. These valuations appear reasonable when viewed through the lens of long-term AI adoption.

AI-Driven Revenue Breakdown: The Real Engine of Growth

The numbers don't lie. Amazon's AWS and Alphabet's Google Cloud are not just cloud providers—they're AI infrastructure powerhouses.

• Amazon's AWS:
• Launched Kiro, an AI-powered IDE, and Bedrock AgentCore, enabling secure AI agent deployment.
• Added Anthropic's Claude 4 and TwelveLabs' Marengo to its foundation model portfolio.

• Invested $83 billion in AI capital expenditures in 2024, signaling intent to maintain leadership.

• Alphabet's Google Cloud:

• Deployed Gemini AI models across 15 platforms, serving 85,000 enterprises.
• Achieved a 35x increase in TPU usage year-over-year, powering enterprise AI workloads.
• Secured $106 billion in backlog, with deals over $250 million doubling in Q2 2025.

These innovations are translating into tangible revenue. AWS's 17.5% growth and Google Cloud's 32% surge outpace competitors like Microsoft Azure, which grew at 12% in the same period. The key differentiator? Both companies are building proprietary AI tools (e.g., Amazon's Nova, Alphabet's Gemini) that reduce reliance on third-party models like OpenAI's ChatGPT.

Risks and Rewards: Is This a Retail Investor's Opportunity?

Ackman's strategy is high-conviction, but it's not without risks.

• Amazon:
• Competition: Microsoft and Meta are investing heavily in cloud AI.

• Margin Pressure: AWS's 15.4x EV/EBITDA suggests skepticism about near-term profitability.

• Alphabet:

• Regulatory Scrutiny: Antitrust lawsuits could force structural changes in its ad business.
• AI Overhang: While Gemini is strong, OpenAI and Anthropic remain formidable rivals.

However, these risks are mitigated by the companies' financial strength. Amazon's $150 billion cash reserve and Alphabet's $200 billion cushion provide flexibility to weather storms. For retail investors, the question becomes: Can you stomach the volatility of concentrated AI bets for the potential of 10x returns?

Investment Advice: Follow Ackman, But With Caution

Ackman's Q2 moves are a masterclass in aligning with structural trends. Amazon and Alphabet are not just riding the AI wave—they're building the boats. Their valuations, while elevated, are justified by their dominance in cloud infrastructure and AI innovation.

For retail investors, the path forward depends on risk tolerance. If you're comfortable with a long-term horizon (5–10 years) and can tolerate volatility, these stocks offer compelling upside. However, avoid overconcentration. Ackman's portfolio is highly concentrated (11 positions), but individual investors should diversify to manage risk.

Historical backtesting from 2022 to 2025 reveals that both AMZN and GOOGL have demonstrated a 57.14% win rate over 10 days following earnings releases, with average returns of up to 3.84% and 6.78% respectively. This suggests that post-earnings periods may offer favorable entry points for investors willing to time their purchases around these events.

Final Take: Ackman's bets are rooted in durable competitive advantages—AWS's 30% cloud market share and Alphabet's AI ecosystem. If you believe in the AI megatrend, these are stocks to consider. But tread carefully: AI is a marathon, not a sprint.

This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before investing.