Draw a Venn diagram of stocks held by the family of exchange-traded funds (ETFs) in Cathie Wood's Ark Invest and those held by Warren Buffett's holding company, Berkshire Hathaway, and few are going to be in the intersection. Yet, as is often the case, there's an exception worth noting. In this case, that "exception" is Amazon (AMZN 1.84%).
Both of these famed investors continue to own the e-commerce and cloud computing giant's shares in their respective portfolios. Admittedly, neither investor has made a big, bet-the-ranch style investment in the stock. Still, the fact that both have bought it, and continue to hold it, is telling.
NASDAQ: AMZN
Key Data Points
While not for certain, perhaps "Queen Cathie" and the "Oracle of Omaha" see Amazon the way I do: as a dirt cheap AI contender. Amazon is clearly benefiting greatly from this growth trend, yet trades at a big discount to peers including Microsoft.
Image source: Getty Images.
Amazon is firing on all cylinders
Like several of its fellow "Magnificent Seven" members, Amazon reported its Q3 2025 results last week. For the quarter ending Sept. 30, the company reported solid year-over-year results, with Amazon's North America, international, and Amazon Web Services (AWS) segments reporting revenue growth of 11%, 14%, and 20%, respectively, though the first two segments saw a drop in operating income.
| Metric | Q3 2024 | Q3 2025 | % Change |
|---|---|---|---|
| Revenue | $158.9 billion | $180.2 billion | 13% |
| Earnings | $15.3 billion | $21.2 billion | 38.6% |
| Earnings per share | $1.43 | $1.95 | 36.4% |
Earnings were up substantially, but this was mostly due to $9.5 billion gain related to Amazon's investment in AI start-up Anthropic. Still, it's reasonable to say that Amazon keeps firing on all cylinders.
AWS reported year-over-year operating income growth.
As for Amazon's North American segment, the operating income decline was due to a one-time expense from a $2.5 billion legal settlement with the U.S. Federal Trade Commission (FTC). Outside of this charge, the North American segment's operating income would have come in at $7.3 billion, up 28% from the prior year's quarter.
As for the international segment, a factor behind its year-over-year operating income decline was the impact of recent layoffs. In the quarters ahead, these one-time severance charges could be more than offset by the resultant cost savings.
As AWS growth continues, Wall Street cheers
The public continues to parse the true meaning of Amazon's latest round of layoffs. Did this very profitable company lay off 14,000 workers to replace them with AI, to further maximize profits, or, as Amazon CEO Andy Jassy has stated, because of "culture"? The jury's still out on the true answer, but over on Wall Street, this layoff news has already become an afterthought.
Instead, all eyes are now back on the earnings release. Specifically, updates to guidance, as well as updates related to the further growth of AWS.
The company's guidance update for the current quarter calls for total revenue of between $206 billion and $213 billion. The market may or may not believe Jassy's statements about layoffs and "culture," but his remarks about AWS and how it's benefiting from the AI growth trend led to a bullish reaction.
Jassy said Amazon continues to "see strong demand in AI and core infrastructure," and that "we're now double the power capacity that AWS was in 2022, and we're on track to double again by 2027. In the last quarter of this year alone, we expect to add at least another 1 gigawatt of power." Given these promising statements, it's not surprising that Amazon shares closed at $244.22 on Oct. 31, hitting a new all-time closing high.
Should you follow Wood's and Buffett's lead?
Few would accuse Cathie Wood of being a value investor. Even Warren Buffett, who made his bones practicing Benjamin Graham style "cigar butt" investing, places greater focus on quality rather than a low valuation these days. Even so, these two are both bullish on an AI stock that trades at a healthy discount to other top AI contenders.
Currently, Amazon trades at a forward P/E ratio of just 28.5. That may seem fair-priced, or maybe pricey to some, but compare it to Microsoft, which trades for 33 times forward earnings estimates. Microsoft may have beaten other top software companies in the "Magnificent Seven" to the punch, but Amazon remains a top AI contender as well.
If AWS continues to experience a growth wave, or if Amazon's partnership with Anthropic opens up new AI monetization opportunities, who knows? Amazon could ultimately benefit from valuation expansion, from the market rerating it on par with the AI software first mover.
