Eagle Capital Management, an investment management company, released its second quarter 2026 investor letter. A copy of the letter can be downloaded here. In the quarter, Eagle Capital Management discussed how enthusiasm around AI capital spending has driven strong S&P 500 earnings growth while also increasing risks from elevated valuations, concentrated demand, and aggressive investment assumptions. Eagle remains a strong believer in AI but prefers constructing a portfolio that can perform across multiple outcomes rather than relying on one forecast. The firm believes current earnings can overstate underlying economics because semiconductor equipment is depreciated over several years, while free cash flow growth remains much weaker. It also expects competition and additional capacity across AI labs, hyperscalers, and semiconductors to eventually create winners and losers. These dynamics are encouraging Eagle to recycle capital toward attractive opportunities outside the most crowded AI trades while maintaining selective exposure to high quality beneficiaries. The portfolio trades at a 20% market discount with faster expected EPS growth. Please review the Strategy’s top five holdings for key selections.
In its second-quarter 2026 investor letter, Eagle Capital Management highlighted Amazon.com, Inc. (NASDAQ:AMZN). Amazon.com, Inc. (NASDAQ:AMZN) is a multinational technology and retail company known for its leading online marketplace and cloud platform. On August 18, 2026, Amazon.com, Inc. (NASDAQ:AMZN) closed at $259.45 per share, reflecting a market capitalization of $2.8 trillion. Amazon.com, Inc. (NASDAQ:AMZN) posted a one‑month return of 5.96%, while its shares gained 15.92% over the past 52 weeks.
Eagle Capital Management stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2026 investor letter:
“Amazon Web Services (“AWS”), Microsoft Azure, and Google Cloud Platform (“GCP”) are highly profitable businesses with strong growth, margins, and returns on capital. We own positions in each. These businesses are growing faster and will be even bigger than we previously thought. However, there is little question that the industry structure they inhabit is worse than it was a few years ago.
Operating massive consumer platforms that aggregate demand for sellers and advertisers, Amazon.com, Inc. (NASDAQ:AMZN) has scale advantages, fast growth, and the ability to deploy AI to further press their leads. Amazon’s retail business, Google Search and YouTube, and Meta are comparatively more mature, but they continue to grow at well above GDP rates with attractive margins. We believe AI is demonstrably helping Google Search and Meta’s advertising business, both of which have accelerated as ad targeting and content capabilities have improved. Amazon and MercadoLibre should also benefit more than brick and mortar peers, which are unlikely to capture the same benefits from advertising, improvements in consumer search, or gains in warehouse robotic technology.”
Amazon.com, Inc. (NASDAQ:AMZN) is in top position on our list of 40 Most Popular Stocks Among Hedge Funds. According to our database, 353 hedge fund portfolios held Amazon.com, Inc. (NASDAQ:AMZN) at the end of the first quarter, compared to 381 in the previous quarter. Amazon.com, Inc. (NASDAQ:AMZN) reported a strong Q1 2026, with revenue increasing 17% year-over-year to $181.5 billion. While we acknowledge the risk and potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Amazon.com, Inc. (NASDAQ:AMZN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Amazon.com, Inc. (NASDAQ:AMZN) and shared Pershing Square Holdings’ views on the company. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
