Amazon emerged as the clear Magnificent Seven favorite among major hedge funds at the end of last year, right before the stock went on to slide 10% in about the first six weeks of the new year. Leading institutional investors, from Bill Ackman of Pershing Square Capital to Stanley Druckenmiller of Duquesne Family Office to Seth Klarman of Baupost Group, bought a net 40.9 million shares in the cloud provider in the fourth quarter, according to a CNBC analysis of data from Verity. Indeed, hedge funds now own 2.5% of Amazon shares outstanding, far more than they do any other Mag 7 company, the data showed. Here is how some of those hedge funds are positioned. Klarman took a new position in Amazon amounting to $490 million. That means the megacap is now the Baupost’s second-largest holding. Ackman raised his stake by 65% to a $2.2 billion holding. That makes the tech stock Pershing’s third-largest holding. Druckenmiller increased his position by more than 800% to $106.8 million, making Amazon the fund’s fourth-largest position. But their bets have yet to pay off. Shares of Amazon are now more than 20% off their November high — having entered a bear market just last week. Other hedge funds, including Tiger Global, Appaloosa Management and Third Point, were among those that actually lowered their exposure to Amazon in the fourth quarter. Amazon is one of the “big three” hyperscalers — alongside Alphabet and Microsoft — that investors expect will see huge revenue growth from growing AI adoption. Yet high valuations, as well as massive capital expenditures plans, have weighed on the companies lately. Those worries came to a head after Amazon’s latest earnings result. On Friday, Feb. 6, the stock dropped 5.6% after saying it would lift 2026 spending to $200 billion, much higher than the $146.6 billion analysts were expecting. Yet Amazon remains loved on the Street . Many analysts said the company’s cloud computing business already appears to be paying off, citing the $35.58 billion in revenue Amazon Web Services generated in the last quarter, more than $34.93 billion that analysts polled by FactSet were anticipating. “Yes, AMZN is investing (AWS, Retail, LEO), but it has a track record of showing ROIC, which leaves us bullish on this under-appreciated GenAI winner,” Morgan Stanley’s Brian Nowak wrote in an earnings note, referring to both Amazon’s low Earth orbit satellite network, and return on invested capital. More recently, on Wednesday, Nowak reiterated that Amazon is a top pick, with his $300 price target implying 50% upside. Not only does he expect demand for AWS will remain strong, he also expects agentic partnerships with OpenAI, Gemini and others will drive shoppers to the online retailer. According to FactSet data, 92% of the 72 analysts who cover the stock give it a buy rating. Amazon was also bought by investors who have traditionally steered clear of growth stocks. For example, Klarman at Baupost Group is a famous value investor who typically looks for undervalued securities. The Cornell graduate likely took his stake after reviewing Amazon’s historically low forward price-to-earnings multiple of 25. That’s far below Amazon’s average forward P/E of 35 over the past five years, according to FactSet data.