Highlights;
- Steve Mandel and Lone Pine Capital increased their stake in Amazon, as part of a strategic portfolio adjustment during Q2.
- Mandel reduced Microsoft shares by about 5% to invest in Amazon, which is benefiting from AI-driven growth, particularly through its AWS cloud computing business.
- AWS continues to be a key driver of Amazon’s profitability, with Q2 sales rising 17% to $30.9 billion, and it accounts for 53% of Amazon’s operating profit despite slower growth compared to competitors.
- Amazon’s improving margins, driven by AWS and advertising, position it as a promising long-term investment, potentially outperforming Microsoft, even though both are strong AI picks.
Billionaire investor Steve Mandel and his hedge fund, Lone Pine Capital, have consistently outperformed the market over the past three years, making them a worthwhile subject of interest for individual investors. Notably, Mandel adjusted his portfolio in Q2 by reducing his Microsoft holdings by approximately 5% and reallocating those funds to Amazon, which has seen an impressive 800% growth over the past decade.
Amazon’s appeal, particularly through its cloud computing segment, Amazon Web Services (AWS), is a significant factor. AWS reported a 17% revenue increase to $30.9 billion in Q2, contributing 18% of Amazon’s total revenue and a substantial 53% of its operating profit, driven by high margins. While AWS’s growth is slightly slower than its competitors, its scale and profitability make it a cornerstone of Amazon’s investment potential.
In comparing Amazon and Microsoft, both companies have similar valuations but differ in growth trajectories. Amazon’s margins are steadily improving, particularly due to AWS and its advertising business, positioning it for faster profit growth compared to Microsoft. This trend suggests Amazon may outperform Microsoft in the long term, despite both being strong AI investments.
Disclosure: Keithen Drury holds a position in Amazon. The Motley Fool has positions in and recommends Amazon and Microsoft, with options including long January 2026 $395 calls and short January 2026 $405 calls on Microsoft. The Motley Fool’s disclosure policy provides further details.
