“Their businesses are worth more than the share price and they’re in the catbird seat on just about everything.” said Charles Lemonides, founder of hedge fund ValueWorks who also holds a stake in the tech juggernaut. “Why wouldn’t one want to own Amazon today?”
Everyone wants compute right now, and Amazon is “the best” at compute, said Lemonides, referring to Amazon Web Services (AWS), its cloud division that owns a fleet of data centers and rents computing capacity and storage crucial to the AI industry. Lemonides believes the pieces of Amazon are worth more than the way the market is valuing the whole company. By his rough figures, AWS alone is worth about half of Amazon’s roughly $2.5 trillion market value, and the retail operation is worth the other half. That means an investor effectively gets the rest of the company—the swiftly growing advertising arm, the media and streaming businesses, and everything else—as a free sweetener on top.
“You can make an easy sum-of-the-parts argument for its being worth more than where it is today,” Lemonides said, adding that the case is stronger now than when he first made it a year ago, because Amazon has kept executing across its businesses while the stock has increased modestly. Plus, the leadership team, led by Jassy, has navigated through turbulent times and remained intact and firing on all cylinders.
“They’re as good a beneficiary of the growth in AI as anybody, because they own so much computing power,” added Lemonides.
However, on closer inspection, Amazon is also on a major spending binge and has told investors it expects to spend about $200 billion on capital expenditures in 2026, mostly for AWS, as it adds AI and cloud capacity. The AI buildout holds down earnings in the near term, which is another reason the stock can look expensive on a forward-earnings basis even to investors who believe the spending will pay off.
Kardatzke warned against reading into sales as a thumbs-down on Amazon, noting that the motivation behind big moves by institutions “isn’t always clearcut.”
“A sell doesn’t always indicate a bearish outlook, as there could be other factors that lead to a portfolio being rebalanced,” he said. Kardatzke also noted that the 13F documents in which funds report their holdings are filed quarterly and firms have up to 45 days after the end of the quarter to file with regulators. He said the filings are a snapshot, but can indicate long-term trends.
Lemonides said the split between the buyers and sellers is more about substance.
“We’re in a momentum-driven market, and investors that pile on to the momentum stocks have been doing the best,” he said. Amazon isn’t rising explosively, so some investors might be a little tired of it, he said. However, in a market where excitement begets excitement, Lemonides is “thrilled” to build his position at the moment, he said. He’s planning to fund it by trimming stakes in winners like Micron Tech and Intel.
“There are those of us, like Tepper and this little guy, who think that excitement could come to Amazon tomorrow,” he said. “And I would rather skate to where the puck is going than where the puck is today.”
