Investing.com -- Amazon (NASDAQ:AMZN) shares climbed 1.5% as Bill Ackman’s Pershing Square (NYSE:XYZ) unveiled a new position in the e-commerce and cloud computing behemoth. The announcement came during Pershing’s first-quarter investor call, where Ryan Israel, Pershing Square’s Chief Investment Officer, highlighted the strategic value of Amazon’s dual business model.
Israel emphasized the strength of Amazon Web Services (AWS), which holds a dominant position in the cloud industry with over 40% market share. He projected a bright future for AWS, noting that currently, less than 20% of IT workloads are cloud-based, but this could rise to 80% in the future. The retail segment of Amazon, despite being less profitable than AWS, was also recognized for its ubiquity and customer-centric approach.
Pershing Square’s decision to invest in Amazon was driven by the stock’s price dip earlier in the year, which Israel attributed to concerns over a potential slowdown in AWS and uncertainties regarding tariffs. However, Pershing Square assessed these issues as temporary, and with Amazon’s shares trading at about 24.5 times earnings, the lowest multiple in the company’s history, they seized the opportunity to invest.
The investor call pointed out that despite the high valuation multiples historically associated with Amazon, the recent price offered an attractive entry point. Pershing Square’s confidence in Amazon’s ability to navigate through the AWS slowdown and tariff impacts, while maintaining a growth trajectory of over 20% in earnings per share, was a key factor in their investment decision.
Amazon’s stock movement today reflects investor sentiment buoyed by Pershing Square’s significant endorsement. The firm’s reputation for strategic investments adds credibility to their positive outlook on Amazon’s future performance, influencing market confidence in the stock.