Amazon.com, Inc.

(NASDAQ Global Select)
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Somewhat Bullish +50

Amazon (AMZN) Stock: Billionaire Seth Klarman Buys $500M in Q4 After Trimming Alphabet Position

AI-generated analysis

πŸ“ˆ Amazon overtook Walmart as the U.S.'s largest company by revenue, posting $716.9B in 2025 compared to Walmart's $713.2B.

πŸ“‰ Amazon's revenue grew 12.4% in 2025 versus Walmart's 4.7%, signaling a widening growth gap between the two rivals.

☁️ AWS continues to be a major growth driver, up 20-24% year over year and now accounting for roughly 18% of total revenue.

πŸ›’ Amazon has recovered its U.S. retail market share to approximately 9%, surpassing Walmart's 7.6% and recovering from pandemic lows.

🚚 The company invested $4 billion in rural same-day delivery hubs, serving 100 million customers with its fastest delivery speeds ever recorded.

πŸ’Ό Diversified revenue streams including third-party fees, advertising, and fulfillment provide Amazon a structural advantage over Walmart's store-centric model.

πŸ’° Value investor Seth Klarman added nearly $500 million to his Amazon stake in Q4 2025, making it the second-largest holding at 9.3% of his fund.

πŸ“‰ Klarman reduced his Alphabet position by 41% to fund the Amazon purchase, likely due to Alphabet's high valuation rising from a forward P/E of 20 to 30.

πŸ€– Amazon plans $200 billion in capital expenditures for 2026 to support surging demand for AI cloud services where supply currently outpaces request.

πŸ“… Management is guiding for 11–15% revenue growth next quarter, significantly higher than Walmart's guidance of 3.5–4.5%.

πŸ“Š Amazon stock rose only 5% while Alphabet surged 65% in 2025, leading Klarman to favor the underperformer with strong fundamentals.

πŸ“‰ Currently, Amazon stock trades below the price Klarman paid in Q4, with analysts projecting around 20% earnings growth for 2027.

⏳ Walmart held the title of America's largest company by revenue from 2001 until Amazon surpassed it this year after a 24-year run.

Bullish Signals
  • Amazon overtook Walmart to become America's largest company by revenue, reporting $716.9 billion versus Walmart's $713.2 billion in 2025.
  • Amazon's revenue grew 12.4% year-over-year, significantly outpacing Walmart's 4.7% growth and widening the competitive gap.
  • High-margin AWS segment grew 24% year-over-year in Q4, now representing 18% of total revenue as demand for AI cloud services outpaces supply.
  • Billionaire investor Seth Klarman purchased nearly $500 million in Amazon stock during Q4 2025 to add to his portfolio's second-largest holding at 9.3%.
  • Analysts project approximately 20% earnings growth for Amazon in 2027, indicating strong future profitability potential.
  • Amazon plans significant capital expenditures of $200 billion for 2026 to meet surging demand and expand infrastructure like same-day delivery hubs.
  • The company raised its revenue guidance for the next quarter to an 11–15% range, exceeding Walmart's guided growth of 3.5–4.5%.
  • Amazon's diverse revenue mix from advertising, fulfillment services, and third-party seller fees provides structural advantages beyond core retail sales.
Risk Factors
  • Billionaire value investor Seth Klarman increased his Amazon position significantly by trimming Alphabet, which recently surged ~65% to a forward P/E of ~30, suggesting he may be rotating into a relatively stagnant stock.
  • Despite recent momentum, Amazon stock has underperformed its competitors and the broader market, rising only 5% over the period when competitor Alphabet gained 65%.
  • The company plans to spend $200 billion in capital expenditures for 2026 to meet AI demand, a massive investment that could impact short-term margins if AWS supply constraints are not fully met.
  • Analysts project roughly 20% earnings growth for 2027 while the stock trades at only ~22 times those estimates, which may leave little room for error in valuation assumptions.
  • Amazon's U.S. retail market share has plateaued around 9%, significantly lower than its peak pre-pandemic levels compared to other retailers like Walmart which remains stable.
  • AWS revenue growth is outpacing supply, creating potential capacity constraints that could limit growth if the company fails to expand infrastructure fast enough.
Full Analysis
Amazon has overtaken Walmart as the largest company in America by revenue for 2025, reporting $716.9 billion compared to Walmart's $713.2 billion. This marks the first time since 2001 that Walmart has lost the top spot, which it held for 24 years before Amazon surpassed Exxon Mobil. The growth disparity highlights Amazon's stronger momentum with a 12.4% revenue increase versus Walmart's 4.7%, suggesting the margin between the two is likely to widen further in subsequent years. A significant portion of Amazon's revenue comes from its diverse business mix, including AWS, advertising, and fulfillment services, rather than just direct e-commerce sales. AWS specifically grew 20% year over year and now represents 18% of total revenue, while the company plans $200 billion in capital expenditures for 2026 to meet surging demand for AI cloud services. This structural advantage allows Amazon to grow its top line even if core retail sales do not directly outsell competitors. Billionaire value investor Seth Klarman capitalized on Amazon's underperformance relative to Alphabet by buying nearly $500 million worth of Amazon stock in Q4 2025, making it his fund's second-largest holding at 9.3%. He funded this purchase by reducing his position in Alphabet stock, which surged 65% during the same period and became expensive for a value investor with a forward P/E rising to around 30. Klarman appears to favor Amazon, which rose only 5% over that timeframe and trades below the price he established his position at, projecting potential earnings growth of around 20% in 2027. Amazon continues to expand its logistics network with $4 billion invested in same-day delivery hubs for rural America, reaching a record 100 million customers utilizing same-day delivery in 2025. The company's U.S. retail market share has increased to around 9%, up from 6% before the pandemic, while Walmart's share remains flat at approximately 7.6%. With Amazon guiding for 11–15% revenue growth next quarter compared to Walmart's guidance of 3.5–4.5%, the investment case focuses on its diversified revenue streams and strong cloud computing growth trajectory.