Amazon's Valuation Reset: Why Institutional Investors Are Loading Up Again

When Chase Coleman III’s Tiger Global Management more than doubled its Amazon stake last month by purchasing over 4 million shares, it wasn’t just another routine portfolio adjustment. For one of Wall Street’s most closely watched hedge funds—which manages over $34 billion in securities—the move signals confidence in a company that has undergone a remarkable financial transformation.

From Expensive to Reasonable: The Three-Year Turnaround

The contrast is striking. Three years ago, as pandemic lockdowns ended, Amazon shares commanded a premium valuation of 110x trailing earnings—even higher than Tesla’s notoriously rich multiples. The culprit? Excess capacity. The company had aggressively expanded its warehouse, delivery, and fulfillment infrastructure during the pandemic, then suddenly faced the opposite problem: too much infrastructure for normalized demand. Add in a $12.7 billion paper loss from its Rivian investment, and you had a recipe for a share price collapse that wiped away nearly 50% of value through 2022.

But here’s where the narrative shifts. While Amazon’s stock was getting halved, the company was quietly executing a profitability turnaround that would’ve seemed unimaginable just months earlier. Net income has exploded by more than 500% to reach $70.6 billion, and the stock price has nearly doubled since those 2022 lows. The current price-to-earnings ratio of 34x—while still elevated—suddenly looks far more defensible for a company of this scale and growth profile.

AWS: The Profit Engine Driving Everything

Understanding why institutional investors like Coleman are accumulating shares requires focusing on one segment: Amazon Web Services. Despite representing just 18.4% of total revenue, AWS generates more than half of Amazon’s total operating profits and continues to accelerate. Last quarter, AWS revenue grew 17.5% year-over-year—a staggering pace for a business generating over $100 billion in annual revenue.

The momentum is undeniable when you examine the customer wins. Q1 2025 brought new enterprise agreements with Adobe and Uber. Q2 featured partnerships with PepsiCo and Airbnb. More importantly, the platform continues rolling out sophisticated new capabilities like Kiro—described as an agentic integrated development environment—and Strands Agents, open-source tools enabling developers to build agent-based applications more efficiently.

This isn’t a mature business showing incremental improvements; it’s a growth engine still finding new gears.

The Math Still Works for Growth

At a $2.4 trillion market capitalization, Amazon is posting 13% net sales growth, with core e-commerce climbing 11% after adjusting for currency effects. Operating income jumped 30.6% year-over-year to $19.2 billion. For context, e-commerce still represents only about 15.5% of total U.S. retail sales—meaning the runway for geographic and market share expansion remains substantial.

Chase Coleman and Tiger Global didn’t become one of the hedge fund world’s most respected managers by missing obvious value traps or hype cycles. When institutions of that caliber are aggressively accumulating shares on price weakness, it’s typically worth paying attention. Amazon’s combination of reasonable valuation, accelerating profitability, and structurally advantaged market position in enterprise cloud computing suggests the investment thesis is more about fundamentals than sentiment.