Key Points
Amazon is a leader in e-commerce, but it has also become an AI giant through its cloud unit.
The stock slipped late last year and in the early part of this year.
Following the lead of billionaires could be a great idea when investing. After all, they've proven their knowledge of companies and the stock market over time -- and have used this to deliver real results to those who have invested in their funds.
Two fantastic examples are Warren Buffett, chairman and former chief executive officer of Berkshire Hathaway, and Bill Ackman, chief of Pershing Square Capital Management. Buffett is known for value investing, aiming to get in on quality companies for less than they're actually worth and holding on for the long term. Ackman also appreciates value, but he's widely known as an activist investor who isn't afraid to make a daring move.
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Buffett's investment style helped Berkshire Hathaway deliver market-beating returns over 60 years; Ackman also has surpassed the S&P 500, with a 17% annualized average return over the past decade, compared to 14% for the benchmark. All of this suggests that it's wise to watch the moves of both of these expert investors.
But they don't necessarily make the same investment decisions. In fact, in the fourth quarter of last year, one of them piled into Amazon (NASDAQ: AMZN) stock while the other one sold. Let's check out these moves and consider which one to potentially follow.
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Amazon and AI
So, first, it's important to note that Amazon has been playing a key role in an industry that's been central to stock market performance in recent years: artificial intelligence (AI). You may most associate Amazon with e-commerce, but the company makes most of its profit from another business, and that's cloud computing. And this business, Amazon Web Services (AWS), offers customers a full portfolio of AI products and services.
All of this has led to strong earnings growth for Amazon and helped boost the shares in recent years. They've climbed in the triple digits over the past three. But late last year and into the early part of this year, some investors grew concerned that tech companies -- such as Amazon -- may be investing too much in AI and might not see the returns.
Now, let's consider the moves made by Warren Buffett and Bill Ackman in the fourth quarter of last year.
- Buffett cut his position in Amazon by 77%, so it now represents about 0.1% of his portfolio. He initially purchased the stock in the first quarter of 2019.
- Ackman increased his position in Amazon by almost 65%, so it now represents 14% of his portfolio. He first bought the stock in the second quarter of last year.
"Ignore the bears"
So, while Buffett greatly reduced his bet on Amazon, Ackman went all in on this AI player, even at a time when investors worried about the AI revenue opportunity ahead. Though Ackman hasn't specifically explained this purchase during the fourth quarter, just a few weeks ago, when growth stocks were at a low, Ackman encouraged investors to "ignore the bears."
In a post on X, he said that it was a fantastic time to buy quality stocks, as many were trading at bargain prices. We might assume that Ackman saw Amazon as a buying opportunity on the dip in the last quarter of 2025.
As mentioned, Amazon stock faced headwinds then and during the first quarter of this year, but in recent weeks, sentiment has improved. Companies continue to speak of high demand for AI, and Amazon, in its letter to shareholders, explained how it's spending to meet concrete demand, not expectations of what might be ahead. All of this has helped lift the stock -- it's now up 10% for the year.
Which billionaire should you follow?
So, considering all of this, should you follow Buffett or Ackman? It's important to note that Buffett has been an Amazon shareholder for a longer period of time, so he might have cut his position to lock in some gains and eventually pour funds into other sectors. Ackman initially invested in Amazon more recently, so he might be interested in benefiting from the company's next wave of growth. All of this shows us that both approaches could be interesting ones, depending on your investment strategy.
And even if Buffett sold some of his shares, the notable word here is "some." The billionaires continue to agree on one thing: Amazon remains a fantastic tech stock to own.
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Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Berkshire Hathaway. The Motley Fool has a disclosure policy.
