4. Amazon.com (NASDAQ:AMZN)
Altimeter Capital’s Stake: $511,418,641
Amazon shares have performed relatively well compared with several other major tech stocks this year. But does the stock have more room to run?
Amazon holds roughly a 30–32% share of the global cloud infrastructure market and is ahead of Microsoft Azure and Google Cloud. But how does AWS benefit from the rise of AI usage around the world? AWS usually generates operating margins estimated at around 30%, significantly higher than traditional retail margins. AWS has a strong moat because of the reliability and scalability it provides to large corporations. It benefits from high switching costs and long-term contracts, as migrating enterprise systems can cost millions and take years, helping maintain stable recurring revenue.
AWS ecosystem of services is another strong business moat. Unlike Microsoft Azure and Google Cloud, AWS offers 240+ cloud services, allowing companies to build, train and deploy AI models, store data, run applications and manage cybersecurity within one platform, increasing switching costs and strengthening customer lock-in over time.
E-commerce and ads are strong growth fundamental catalysts for the stock. Amazon.com Inc (NASDAQ:AMZN) controls roughly 40% of U.S. e-commerce, which gives the company access to consumer purchase data. This creates a goldmine for advertisers to target users, and Amazon.com Inc (NASDAQ:AMZN) is tapping into that opportunity. Amazon’s ad segment has been growing around 20% annually in recent years and already generates tens of billions in yearly revenue, making it one of the largest digital advertising platforms behind Google and Meta.
TCW Relative Value Large Cap Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its fourth quarter 2025 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a $2.3 trillion internet company headquartered in Seattle, WA. Amazon.com is an online retailer that also offers personalized shopping services, web-based credit card payment, and direct shipping to customers. AMZN is the largest e-commerce platform in the US with a ~40% market share. Amazon’s secret sauce is their logistics infrastructure that allows for superior delivery times and lower costs than peers, which they use to delight their loyal Prime membership base. Amazon also operates a cloud platform offering services globally through Amazon Web Services (AWS), a fantastic second business with growth opportunities in cloud migrations and AI workloads. Advertising is increasingly important to the overall business with nearly $70 billion of annualized revenues, driven by Sponsored Listings as well as Fire TV/Prime Video ad inventory (e.g., during Thursday NFL games). At initiation in October 2025, shares of AMZN met two of the five valuation factors (price-to-sales; price to-cash flow).
The investment catalyst is new products/markets. AWS has been less impacted by the wave of AI spending than its hyperscale peers as they have top heavy clients that are particularly driving growth (i.e., OpenAI for MSFT† Azure). However, it is set to close the gap as corporates and start-ups begin to scale their inference workloads as they introduce AI-powered products. Additionally, AWS is supply constrained but is set to get significantly more capacity in the next 6-12 months, both from third party providers like NVDA as well as their own custom-designed silicon (Trainium 2). On the retail side, the company is demonstrating operational excellence with consistent improvements in its cost to serve. We expect this to continue and receive a mix benefit as advertising continues to grow as a percent of its North America and International segments. As Amazon leadership execute these strategic initiatives, the company can grow cash flow and earnings materially over the medium term.”
