Some notable billionaire-run hedge funds purchased Amazon (AMZN -0.31%) stock in the second quarter, including those of Peter Thiel and David Tepper. Both of these firms have reputations for being right more often than not, and their moves to purchase Amazon shares during the quarter were notable.
However, they purchased those shares before Amazon delivered its impressive second-quarter results, which caused a rally in the stock. Since Q2 ended, Amazon's stock has risen about 10%, so buyers today will have to pay more to purchase shares than Thiel and Tepper did a few months ago.
Is it still a good time to buy? Or has the near-term window closed for now?
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Amazon's investments are starting to pay off
If you're following any of the artificial intelligence (AI) hyperscalers, you've probably noticed the sheer amount of money each one is spending on data centers. Amazon is leading the way. It now expects to spend $220 billion on data center construction in 2026, up from the $200 billion in capex it guided for earlier this year. While that may seem like an incredible amount of money to be investing in one area, and it is, the reality is that Amazon is seeing huge demand for its cloud computing resources, and it's turning its new data center infrastructure into real growth.
NASDAQ: AMZN
Key Data Points
During Q2, Amazon Web Services (AWS) saw revenue growth of 37% year over year. Its operating income soared 64%, showing that this growth is also massively profitable. It takes a while for any given data center project to go from capex-absorbing cost center to income-producing asset, but once 2026's massive investments are monetized, AWS' revenue could truly soar.
This will lead to substantial growth over the next few years, but Amazon is far from done with its AI build-out. CEO Andy Jassy noted that despite its $220 billion investment in 2026, it still won't have enough cloud computing capacity to meet demand for this year. Furthermore, demand is already exceeding what the company could meet with its planned additional capacity deployments in 2027. It's already seeing signs of 2028 demand emerging, showing that cloud computing companies are still far behind AI-driven demand.
This places Amazon in an excellent position to grow rapidly over the next few years, primarily driven by expansions to AWS. As a result, the stock's 10% increase so far in Q3 is inconsequential, as there appears to be plenty more growth ahead. Tepper and Thiel were smart to pile into Amazon during Q2, as it marked the beginning of a multiyear run fueled by cloud computing growth.
