Should Retail Investors Follow Billionaires Bill Ackman and Chase Coleman Into Amazon Stock?

In the second quarter of 2025, two of the most astute investors in modern finance—Bill Ackman and Chase Coleman—made bold moves into Amazon (AMZN). Ackman, through Pershing Square, initiated a $1.28 billion position, while Coleman's Tiger Global increased its stake by 62%. These decisions, made by investors known for their contrarian strategies, signal a vote of confidence in Amazon's long-term value proposition. But should retail investors follow suit? To answer this, we must dissect Amazon's financial resilience, its strategic bets in AI and cloud computing, and the evolving competitive landscape.

Amazon's Financial Resilience: A Foundation for Growth

Amazon's Q2 2025 results underscore its enduring dominance. Net sales surged 13% year-over-year to $167.7 billion, driven by 17.5% growth in AWS, which now generates $30.9 billion annually. Operating income rose to $19.2 billion, with AWS contributing $10.2 billion alone. Even as free cash flow dipped due to capital expenditures, the company's operating cash flow hit $121.1 billion for the trailing twelve months. These figures reflect a business model that balances scale with innovation, a hallmark of generational investments.

The company's reinvestment in AI and cloud infrastructure is particularly striking. AWS's $378 billion capital expenditure plan for 2025—65% higher than 2024—signals a commitment to addressing capacity constraints and capturing AI-driven demand. Meanwhile, Amazon's own AI tools, such as Kiro (an agentic IDE) and Strands (an open-source agent framework), are democratizing access to its ecosystem, fostering developer loyalty and accelerating innovation.

Strategic Alliances and AI Dominance

Amazon's partnerships with AI pioneers like Anthropic (creator of Claude) and its development of Trainium chips—offering 30–40% better price performance than GPUs—position AWS to dominate the inference phase of AI, where margins are higher. Analysts project AWS's GenAI segment to reach a multibillion-dollar revenue run rate by 2026, growing at triple-digit percentages. This aligns with Ackman's focus on AWS as a “core strength” and Coleman's emphasis on Amazon's “diverse high-growth segments.”

Competitive Threats: The Cloud Wars Intensify

While AWS holds 30% of the global cloud market (Synergy Group), Microsoft Azure and Google Cloud are closing the gap. Azure's 20% share is bolstered by its hybrid cloud solutions and enterprise integration, while Google Cloud's AI-first approach appeals to data-driven firms. However, Amazon's first-mover advantage in cloud computing and its $100+ billion capex plan for 2025 suggest it is not ceding ground easily.

Emerging threats, such as niche cloud providers and quantum computing pioneers like IBM, add complexity. Yet, Amazon's ability to adapt—expanding into satellite internet (Project Kuiper) and autonomous vehicles (Zoox)—demonstrates a strategic breadth that few rivals match.

Risks and Realities

Retail investors must weigh these strengths against risks. Rising U.S. tariffs could pressure Amazon's third-party sellers, though CEO Andy Jassy notes demand remains resilient. Additionally, the stock's 30% decline in early 2025, which prompted Ackman's entry, raises questions about valuation. At $162.28 billion in projected Q2 revenue and a P/E ratio of ~45, AMZN trades at a premium to the S&P 500.

The Billionaire Playbook: Lessons for Retail Investors

Ackman and Coleman's rationale hinges on Amazon's long-term moats:
1. AWS's Scalability: With 99% of AI market ambitions, AWS is a cash cow with recurring revenue potential.
2. Operational Efficiency: Jassy's focus on cost-cutting and automation (e.g., drone delivery, same-day fulfillment) enhances margins.
3. AI-Driven Ecosystem: Tools like Strands and Kiro create network effects, locking in developers and enterprises.

However, these investors also recognize the importance of timing. Ackman's entry post-30% decline and Coleman's incremental accumulation suggest a belief in mean reversion and undervaluation.

Conclusion: A Generational Bet?

Amazon's long-term value proposition is robust, but it is not without risks. For retail investors, the decision to follow Ackman and Coleman depends on risk tolerance and time horizon. The company's dominance in cloud computing, AI innovation, and e-commerce fundamentals make it a compelling candidate for a diversified portfolio. Yet, its valuation and competitive pressures demand caution.

In the end, Amazon embodies the duality of modern investing: a blend of blue-chip stability and tech-driven disruption. For those willing to ride the long wave of digital transformation, it may well be a generational opportunity—but one that requires patience and a clear-eyed view of the horizon.