Why Wall Street Is Finally Waking Up to Amazon's Hidden AI Advantage — And What Billionaires Like Druckenmiller Already Know

Stanley Druckenmiller’s recent decision to allocate over 2% of his family office portfolio to Amazon (NASDAQ: AMZN) tells us something Wall Street might still be missing. The veteran hedge fund manager didn’t just chase the “Magnificent 7” narrative — he saw something more fundamental: a company caught between a narrative of weakness and the reality of remarkable operational transformation.

The AWS Narrative Flip Nobody’s Talking About

For years, Amazon Web Services got painted as the laggard in cloud AI. Microsoft’s Azure and Alphabet’s Google Cloud seemed to capture investor imagination, but the data tells a different story.

AWS just posted 20% year-over-year revenue growth, climbing to $33 billion last quarter — a meaningful acceleration from the prior period’s 17.5%. That acceleration wasn’t random. It came directly from the relationship with Anthropic, an AI startup now running most of its computational infrastructure on AWS and experiencing explosive growth.

The numbers are staggering: Anthropic started this year with $1 billion in annual recurring revenue. Projections now suggest $9 billion in the near term, potentially reaching $70 billion by 2028. As more AI companies face infrastructure bottlenecks and capacity constraints, AWS becomes less of a commodity cloud player and more of essential infrastructure for the AI economy.

The Retail Engine That Never Quit

While everyone fixates on AI, Amazon’s e-commerce division keeps doing what it does best: generating consistent, reliable revenue growth.

North America revenue climbed 11% year-over-year to $106 billion. International markets grew 10% in constant currency terms, reaching $40 billion. These aren’t explosive numbers, but they’re proof of a business model that adapts and persists. Fresh initiatives in rapid grocery delivery, warehouse automation, and generative AI tools for merchants show Amazon isn’t resting on past success.

Then there are the moonshot projects: Zoox (autonomous vehicles), Alexa ecosystem, and Project Kuiper (satellite internet). Today, these burn capital and generate negligible revenue. In a decade? They could be transformative.

The Real Story: Margin Expansion Is Just Getting Started

This is where Druckenmiller’s timing becomes interesting. Amazon’s raw operating margin sits under 10% — a figure that actually declined from the year-ago quarter. But that tells half the story.

Stripping out one-time charges from fines and workforce reductions, Amazon’s third-quarter operating margin hit a record 12%. That’s not a blip. It’s the beginning of operating leverage kicking in.

Between 2020 and 2022, Amazon overcorrected by hiring aggressively during the pandemic boom. Now, as the company right-sizes headcount, margins expand while revenue keeps growing. Over the trailing twelve months, Amazon generated just under $80 billion in EBIT. As margin expansion accelerates and revenue growth persists across both AWS and retail, EBIT growth should compound meaningfully.

Why This Setup Matters Right Now

Amazon sits at an inflection point. The company has a dominant cloud business experiencing AI-driven acceleration. It maintains a cash-generative retail empire. Its profitability metrics are improving, not deteriorating. And management is making disciplined capital allocation decisions that should drive shareholder returns.

For investors searching for exposure to AI infrastructure without betting on high-growth startups, or those seeking a large-cap company actually expanding margins in a mature market, the case is straightforward. Amazon isn’t the AI narrative everyone wants it to be — it’s something possibly better: an established business benefiting from AI demand while simultaneously becoming a more efficient version of itself.