Ackman Takes a Swing at Amazon — Should You?

Key Points

• Pershing Square's new stake highlights Amazon's long-term value, and investors should be excited about this development. 
• Analysts continue to back the stock, with some price targets suggesting a nearly 50% upside.
• Recent technical consolidation should offer a setup for the next leg higher.

Despite a mixed week of trading, shares of Amazon.com Inc NASDAQ: AMZN are set to close out May in a strong position, with shares sitting around the $205 level in Friday's pre-market session. They're holding onto an impressive 25% of gains since April, and while the past week has seen some choppy consolidation, momentum may be ready to resume, thanks in part to some high-profile support.

Wall Street has been taking notice of the recent update from Bill Ackman's Pershing Square fund, which just confirmed it had taken a new stake in the tech giant. While the firm didn't disclose the size of the investment, the move has added fuel to the bull case. 

In the update, Pershing's Ryan Israel pointed to Amazon's dual-engine business model,  e-commerce and cloud, as a major driver of long-term upside. In particular, he emphasized the growth potential of AWS, which already controls over 40% of the global cloud market.

Despite this dominance, only around 20% of IT workloads are currently cloud-based, but this figure could eventually climb to 80%, giving Amazon a significant runway for growth in the years ahead.

AMZN Bullish Fundamentals

While AWS is far more profitable, Israel was also bullish on Amazon's core retail business. He highlighted the company's massive customer base as a structural advantage that is difficult for competitors to replicate.

According to Israel, the firm was watching Amazon closely earlier this year when the stock pulled back on concerns about slowing AWS growth and tariff-related headwinds. Those fears, he said, were temporary. The real opportunity emerged when Amazon's valuation dropped to around 24.5x earnings—its lowest P/E ratio on record. 

It's a classic case of smart money stepping in when the headlines are murky. And in markets, that kind of conviction tends to attract followers. Ackman's reputation alone was likely enough to make other investors take a closer look, reinforcing the floor under the stock and potentially setting it up for the next leg higher.

Wall Street Remains in Amazon's Corner

Pershing's disclosure adds to an already stacked deck of institutional support. Analyst sentiment on Amazon has been overwhelmingly bullish for months, with May alone seeing a flurry of reaffirmed Buy ratings. JMP Securities, UBS Group, and Tigress Financial are just a few of the names behind recent bullish stances. 

Tigress, in particular, stands out for placing a $305 price target on the stock, which is pointing towards almost 50% upside from current levels. For a company of Amazon's size, that's a serious vote of confidence. While earnings are growing, so is the narrative.

Amazon is increasingly being framed as one of the better long-term AI plays, thanks to its infrastructure, cloud leadership, and innovation.

Technical Picture Supports the Case

From a technical perspective, Amazon's chart also shows a healthy setup. The stock has consolidated just below its recent highs, suggesting a possible base is forming for the next breakout. The relative strength index (RSI) is rising but not overheating, and the MACD remains bullish. 

This means that even if the past few sessions have seen some sideways trading, the broader momentum is still in place.

Not Just a Hedge Fund's Darling

The key takeaway here is that Ackman's endorsement isn't an isolated bullish opinion; it aligns with the broader institutional consensus that's been building for months now. And when both the fundamentals and the technicals point in the same direction, it's worth paying attention.

Yes, the stock has already run hard since April, and yes, it's natural to be cautious after a move like that. But with growth accelerating in AWS, buy ratings continuing to flow in, and the smart money starting to jump on board, the next few months should offer even more upside.