In Q3, Stanley Druckenmiller’s Duquesne Family Office purchased over 435,000 shares of Amazon (NASDAQ:AMZN) for an average cost basis of $226.34. Druckenmiller, known for his macro-driven approach to investing with an equally keen eye for value, has also been making several other changes to his portfolio in recent quarters. Why did Stan Druckenmiller buy Amazon stock, and does his decision to buy AMZN contain broader lessons about his views on the current investing landscape?
Druckenmiller’s Cyclical History With Amazon
Stanley Druckenmiller has established a fairly regular habit of buying blocks of Amazon shares, selling all or most of them and then buying a new block. AMZN was first added to his portfolio in 2013, when he bought over 3 million shares at an average cost of a little under $15. Since then, Amazon has appeared as a new holding on six separate occasions, including the most recent one in Q3. During most of these cycles, Druckenmiller has loaded up before strategically selling off as Amazon’s share prices rose, creating an ongoing system of profit-taking that has generated significant amounts of cash over the years.
It’s interesting to note, however, that Druckenmiller’s last cycle of buying and selling wasn’t particularly profitable. In Q4 of 2024, he bought about 328,000 shares at an average price of around $205. The shares were then liquidated throughout Q1 and Q2 of this year at average prices of $217 and $198 during those periods, respectively.
Why Did Druckenmiller Buy Back In During Q3?
One of the most obvious reasons for Druckenmiller’s decision to get back into Amazon in Q3 is its currently attractive valuation relative to its earnings growth. On a trailing 12-month basis, shares of AMZN are up by less than 15 percent. Net income as of Q3, however, was up by more than 38 percent compared to the year-ago quarter. Net sales, meanwhile, were up by 13 percent.
This disconnect between earnings growth and returns over the past year may have left Amazon shares somewhat undervalued, a view that is also closely reflected in analyst price forecasts for the stock. The average target price for AMZN is currently $293.36, implying a gain of almost 26 percent from the most recent price of $232.87. Amazon also appears to be poised for what could be significant growth going forward, with analysts projecting annualized EPS gains of over 19 percent through the next 3-5 years.
The decision to buy Amazon again also seems to fit a broader strategic trend in Druckenmiller’s recent investment activity. The Duquesne Family Office has unloaded its entire holdings in NVIDIA and Palantir, two AI giants that both command very high valuations and may be among the most at-risk stocks if the market sours on AI.
During Q3, Druckenmiller’s tech buying was focused on the likes of Amazon, Taiwan Semiconductor Manufacturing, MercadoLibre and DocuSign. Other buys included non-tech firms like Restaurant Brands International, Bank of America and a collection of pharmaceutical businesses. As such, Druckenmiller seems to be getting away from AI pure plays, focusing instead on successful tech businesses with substantial AI exposure and potentially undervalued businesses outside of the tech sector.
This closely ties in with one of Amazon’s greatest strengths, namely the ongoing growth of its high-margin AWS cloud computing segment. In Q3, AWS substantially outperformed overall revenue growth with a 20 percent year-over-year increase in sales to $33.0 billion. This fast-growing segment gives Amazon significant exposure to the AI ecosystem but still represents a modest share of revenues compared to its massive eCommerce business.
When looking at Druckenmiller’s positions, it’s also often useful to consider how macroeconomics could come into play. In Amazon’s case, a couple of key macro factors immediately suggest themselves. To begin with, the Federal Reserve is beginning to ease off interest rates, a trend observers expect to bring the baseline rate down to 3.4 percent by the end of next year. Ongoing rate cuts could both have a modest stimulative effect on consumer spending and make high-growth tech stocks more attractive overall.
As a large eCommerce seller, Amazon could also stand to benefit from what appears to be an increasingly probable rollback of some of the tariffs imposed by the United States in April. Already, the White House has moved to reduce tariffs on certain agricultural goods that the US can’t adequately supply for itself. A much larger reduction in tariffs could come if the Supreme Court rules against the Trump administration in a long-awaited case that calls into question the president’s use of IEEPA to impose broad and permanent tariffs. In oral arguments earlier this month, many of the court’s justices took what seemed to be skeptical stances on the arguments for the authority presented by the government.
Why Did Druckenmiller Buy Amazon and Is the Stock Still Attractive?
Considering his long history of jumping in and out of Amazon shares, it’s unlikely that Druckenmiller initiated a new position with the intention of holding it for growth over years or decades. Instead, it’s more likely that he sees Amazon as being potentially undervalued, creating an opportunity for him to once again use it as a cash generator. Macro trends, especially the expected cuts in Federal Reserve rates, could also bolster the value argument for Amazon.
From a strategic standpoint, AMZN also seems to fit Druckenmiller’s larger set of moves away from stocks at the cutting edge of AI and into somewhat more conservative opportunities that likely still have substantial room for growth ahead of them. Indeed, Druckenmiller’s activity over the last couple of quarters is starting to look extremely prescient, as pure AI stocks have been wobbling recently due to concerns about overvaluation.
In terms of whether AMZN could still be attractive to investors today, it’s worth noting that the stock has risen relatively little from the average cost Druckenmiller paid in Q3. The stock’s reasonable valuation, combined with a broadly favorable Q3 earnings report and a seemingly long runway for future growth, makes Amazon a compelling investment opportunity for investors looking for solid returns over many years.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.