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What do hedge funds see in Amazon (NASDAQ: AMZN) right now? The answer is likely "value." Large funds, including Bill Ackman's Pershing Square and Appaloosa Management, have reportedly increased their positions in Amazon. Their underlying thesis is that Amazon is undervalued relative to other artificial intelligence and cloud computing companies.

More pure-play or native AI and cloud computing businesses, such as Nvidia (NASDAQ: NVDA) and Intel (NASDAQ: INTC), have seen their valuations become so inflated that it can be hard to justify their prices. Nvidia trades at 18 times trailing sales and Intel commands a 12x price-to-sales ratio nowadays.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

Amazon is an e-commerce platform that also owns Amazon Web Services, and that hybrid structure is what has the company trading at more reasonable multiples. Amazon's P/S ratio? A modest 3.4x.

Amazon's stock is relatively flat in 2026 and up just over 7% in the past 12 months as of this writing. Its forward and trailing P/E ratios are hovering around 30. The stock is currently trading at less than 4 times sales.

As is the trend with AI-related companies, Amazon's biggest risk is its heavy AI capex. Amazon anticipates spending around $200 billion on AI infrastructure this year alone. Competition in the space is fierce, but Amazon has a strong, diversified business that truly gives it a leg up. It's understandable why hedge funds would be loading up on shares. If you can stomach the heavy spending on AI, then Amazon is one of the better-priced stocks in the space.

In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. If you'd invested $5,000 then, you'd be sitting on $2,499,895 today.*

Now, for the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. It's a key player in the $1.8 trillion space race, and with the stock recently sitting 20% off its highs, the window to get in early is closing fast.

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*Stock Advisor returns as of June 22, 2026

Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Intel, and Nvidia. The Motley Fool has a disclosure policy.

Hedge Funds Are Buying Up Amazon Stock. Should You Join In, Too? was originally published by The Motley Fool