Buffett's Partner Increases Stake in Amazon
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy GOOG?
Source: Fool
- Investment Strategy Shift: Seth Klarman, Buffett's long-time partner, trimmed his Alphabet stake by 41% in Q4 2023, reflecting his keen judgment on market valuations, especially as Alphabet's P/E ratio surged from 20 in August to 30 by December, indicating his caution towards high valuations.
- New Investment Focus: Klarman reinvested nearly $500 million from the Alphabet sale into Amazon, accounting for 9.3% of his portfolio in Q4, making it the second-largest holding, showcasing his confidence in Amazon's future growth potential.
- Cloud Computing Growth Potential: Although Amazon's cloud business growth has lagged behind competitors, its AWS revenue grew 24% year-over-year in Q4 2023, with plans for $200 billion in capital expenditures by 2026 to accelerate growth, indicating market opportunities amid surging AI service demand.
- Long-Term Investment Opportunity: Amazon's stock currently trades below the price when Klarman established his new position, with a projected 20% earnings growth in 2027, and its 22 times earnings multiple relative to analysts' expectations appears attractive, suggesting that long-term investors still have a chance to follow Klarman's investment ideas.
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Analyst Views on GOOG
Wall Street analysts forecast GOOG stock price to rise
15 Analyst Rating
14 Buy
1 Hold
0 Sell
Strong Buy
Current: 303.560
Low
255.00
Averages
336.08
High
400.00
Current: 303.560
Low
255.00
Averages
336.08
High
400.00
About GOOG
Alphabet Inc. is a holding company. The Company's segments include Google Services, Google Cloud, and Other Bets. The Google Services segment includes products and services such as ads, Android, Chrome, devices, Google Maps, Google Play, Search, and YouTube. The Google Cloud segment includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Its Other Bets segment is engaged in the sale of healthcare-related services and Internet services. Its Google Cloud provides enterprise-ready cloud services, including Google Cloud Platform and Google Workspace. Google Cloud Platform provides access to solutions such as artificial intelligence (AI) offerings, including its AI infrastructure, Vertex AI platform, and Gemini for Google Cloud; cybersecurity, and data and analytics. Google Workspace includes cloud-based communication and collaboration tools for enterprises, such as Calendar, Gmail, Docs, Drive, and Meet.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Increased Amazon Investment: Klarman invested nearly $500 million in Amazon in Q4, making it 9.3% of Baupost's portfolio and the second-largest position, reflecting his strong conviction in Amazon's growth potential amidst market skepticism.
- Rising Valuation for Alphabet: Alphabet's forward P/E ratio increased from around 20 at the end of August to 30 by December, driven by robust growth in its core search and cloud businesses, prompting Klarman to lock in profits at elevated valuations.
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- Strong Cloud Business Growth: Google Cloud's revenue grew 48% year-over-year to $17.7 billion in Q4 2025, with a backlog nearing $240 billion, indicating robust market demand; however, growth in 2026 will depend on the rapid expansion of AI infrastructure.
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- Investment Strategy Shift: Seth Klarman, Buffett's long-time partner, trimmed his Alphabet stake by 41% in Q4 2023, reflecting his keen judgment on market valuations, especially as Alphabet's P/E ratio surged from 20 in August to 30 by December, indicating his caution towards high valuations.
- New Investment Focus: Klarman reinvested nearly $500 million from the Alphabet sale into Amazon, accounting for 9.3% of his portfolio in Q4, making it the second-largest holding, showcasing his confidence in Amazon's future growth potential.
- Cloud Computing Growth Potential: Although Amazon's cloud business growth has lagged behind competitors, its AWS revenue grew 24% year-over-year in Q4 2023, with plans for $200 billion in capital expenditures by 2026 to accelerate growth, indicating market opportunities amid surging AI service demand.
- Long-Term Investment Opportunity: Amazon's stock currently trades below the price when Klarman established his new position, with a projected 20% earnings growth in 2027, and its 22 times earnings multiple relative to analysts' expectations appears attractive, suggesting that long-term investors still have a chance to follow Klarman's investment ideas.
See More
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- New Investment in Amazon: Klarman invested nearly $500 million in Amazon in Q4 2023, accounting for 9.3% of Baupost's portfolio, reflecting his confidence in the company's growth potential, particularly in the competitive cloud computing sector.
- AI Market Outlook: Klarman's investment strategy highlights a focus on the AI sector, as Alphabet faces antitrust challenges and market concerns over its AI products, yet its core search and cloud computing businesses show strong growth support for the future.
- Long-Term Growth Opportunities: Amazon's stock rose only 5% from early to late 2025, contrasting sharply with Alphabet's 65% increase, which Klarman may view as an undervalued opportunity, with expectations of accelerated earnings growth by 2027 attracting long-term investor interest.
See More
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- New Model Launch: Google announced the rollout of its cornerstone AI program, Gemini 3.1 Pro, focusing on complex task handling, which is expected to attract its 740 million users and further solidify its leadership in the AI market.
- Strong Financial Performance: Google's Q4 search business grew by 17%, surpassing Wall Street's AI expectations, while capital expenditures reached $105.7 billion in 2025, indicating strong confidence in the company's future AI prospects.
- Management Vision: CEO Sundar Pichai compared the current AI revolution to an industrial revolution, emphasizing that large-scale investments are necessary and expected to drive long-term growth across Google’s search, cloud, and other sectors.
- Long-Term Investment Potential: With Google shares currently at $303, analysts have a consensus price target of $356.21, while Canaccord analyst set a target of $415, indicating a potential 37% upside over the next year, reflecting strong conviction in the AI opportunity.
See More
Alphabet's 2026 Outlook: AI Investments and Cloud Growth
- Search Business Moat: In its Q4 earnings call, Alphabet highlighted that AI-powered search experiences are driving increased user engagement and longer query sessions, suggesting that AI may enhance rather than weaken its core advertising business.
- Cloud Growth Potential: Google Cloud's revenue grew 48% year-over-year to $17.7 billion in Q4 2025, with a backlog of nearly $240 billion, indicating that future growth will hinge on a planned $175 billion to $185 billion investment in infrastructure.
- AI Infrastructure Investment: Alphabet plans significant investments in servers and data centers in 2026, which are expected to accelerate cloud growth, as AI customers utilize 1.8 times more products than non-AI customers, indicating strong customer stickiness.
- Margin Pressure and Future Outlook: While rising capital expenditures may pressure operating margins, Alphabet's CFO noted that Gemini AI's unit costs have sharply declined due to efficiency gains, suggesting that profitability may improve as AI adoption increases across its Search and Cloud businesses.
See More
Seth Klarman Cuts Alphabet Stake, Boosts Amazon Investment
- Alphabet Stake Reduction: Seth Klarman cut his stake in Alphabet by over 40% last quarter after the stock surged due to positive news, indicating his astute market timing and profit-taking strategy.
- Increased Amazon Investment: Klarman invested nearly $500 million in Amazon in Q4, making it 9.3% of Baupost's portfolio and the second-largest position, reflecting his strong conviction in Amazon's growth potential amidst market skepticism.
- Rising Valuation for Alphabet: Alphabet's forward P/E ratio increased from around 20 at the end of August to 30 by December, driven by robust growth in its core search and cloud businesses, prompting Klarman to lock in profits at elevated valuations.
- Cloud Market Dynamics: While Amazon's cloud growth lags behind competitors, its larger revenue base and potential for 20% earnings growth make it attractive, showcasing Klarman's ability to identify undervalued opportunities in a competitive landscape.
See More
Alphabet's AI Drives Growth Amid Profitability Concerns
- AI Search Experience Enhancement: In its Q4 2025 earnings call, Alphabet highlighted that AI-powered search experiences, such as AI Overviews and AI Mode, are driving increased user engagement and longer, more complex query sessions, which may enhance the performance of its core advertising business by improving ad intent matching.
- Strong Cloud Business Growth: Google Cloud's revenue grew 48% year-over-year to $17.7 billion in Q4 2025, with a backlog nearing $240 billion, indicating robust market demand; however, growth in 2026 will depend on the rapid expansion of AI infrastructure.
- Capital Expenditure Plans: Alphabet plans to invest between $175 billion and $185 billion in capital expenditures in 2026, primarily for expanding servers and data centers, which may increase operating costs but also provide financial flexibility for future AI investments.
- Profitability Pressure: Although rising capital expenditures may compress operating margins in 2026, Alphabet's CFO noted that the unit costs for Gemini AI have significantly decreased due to efficiency gains, suggesting that profitability may improve as AI adoption increases across its Search and Cloud businesses.
See More
Buffett's Partner Increases Stake in Amazon
- Investment Strategy Shift: Seth Klarman, Buffett's long-time partner, trimmed his Alphabet stake by 41% in Q4 2023, reflecting his keen judgment on market valuations, especially as Alphabet's P/E ratio surged from 20 in August to 30 by December, indicating his caution towards high valuations.
- New Investment Focus: Klarman reinvested nearly $500 million from the Alphabet sale into Amazon, accounting for 9.3% of his portfolio in Q4, making it the second-largest holding, showcasing his confidence in Amazon's future growth potential.
- Cloud Computing Growth Potential: Although Amazon's cloud business growth has lagged behind competitors, its AWS revenue grew 24% year-over-year in Q4 2023, with plans for $200 billion in capital expenditures by 2026 to accelerate growth, indicating market opportunities amid surging AI service demand.
- Long-Term Investment Opportunity: Amazon's stock currently trades below the price when Klarman established his new position, with a projected 20% earnings growth in 2027, and its 22 times earnings multiple relative to analysts' expectations appears attractive, suggesting that long-term investors still have a chance to follow Klarman's investment ideas.
See More
Buffett's Partner Sells Alphabet, Invests in Amazon
- Alphabet Stake Reduction: Seth Klarman reduced his stake in Alphabet by 41% in Q1 2023, despite the stock's rise in Q4 due to positive developments, demonstrating his sensitivity to market fluctuations and dynamic portfolio adjustments.
- New Investment in Amazon: Klarman invested nearly $500 million in Amazon in Q4 2023, accounting for 9.3% of Baupost's portfolio, reflecting his confidence in the company's growth potential, particularly in the competitive cloud computing sector.
- AI Market Outlook: Klarman's investment strategy highlights a focus on the AI sector, as Alphabet faces antitrust challenges and market concerns over its AI products, yet its core search and cloud computing businesses show strong growth support for the future.
- Long-Term Growth Opportunities: Amazon's stock rose only 5% from early to late 2025, contrasting sharply with Alphabet's 65% increase, which Klarman may view as an undervalued opportunity, with expectations of accelerated earnings growth by 2027 attracting long-term investor interest.
See More
