When a billionaire activist investor keeps adding to a position quarter after quarter, people tend to notice. Dan Loeb's Third Point LLC has been doing exactly that with Amazon.com Inc. (AMZN), bumping its stake up by 4% during the third quarter of 2025.

The Growing Conviction

Third Point's 13F filings tell a story of steadily building confidence. As of September 30, the hedge fund held 2.81 million Amazon shares, up from 2.71 million in the second quarter and 2.35 million in the first quarter of 2025. That's the kind of pattern that suggests Loeb sees something he likes in Amazon's trajectory.

Strong Quarter Backs The Thesis

In October, Amazon delivered numbers that justify some of that enthusiasm. The company reported third-quarter net sales of $180.2 billion, comfortably beating Wall Street's $177.8 billion estimate. Earnings per share came in at $1.95, blowing past the consensus estimate of $1.57.

Looking ahead, Amazon guided fourth-quarter net sales to land between $206.0 billion and $213.0 billion, representing year-over-year growth of 10% to 13%.

What Analysts Are Saying

The earnings sparked a wave of analyst upgrades and price target increases. Gene Munster from Deepwater Asset Management called the market reaction "very positive" and emphasized that investors should focus on margin expansion. According to Munster, automation and artificial intelligence are driving Amazon's improved profitability in a meaningful way.

A Telsey analyst pointed out that "AWS remained the star of the show, with growth accelerating due to rising demand for cloud and AI products." That cloud business continues to be the profit engine that powers Amazon's broader ambitions.

Analysts from Bank of America Securities, JP Morgan, and Wedbush highlighted Amazon's progress with autonomous AI agents, stronger performance from its Trainium chips, and deeper integration with Nvidia technology. The AI infrastructure buildout is clearly resonating with the analyst community.

Major AI Investments Taking Shape

Amazon isn't just talking about AI; it's putting serious money behind it. The company disclosed plans to invest over $35 billion in India's artificial intelligence and cloud computing sector by 2030.

Even bigger news: Amazon is reportedly in negotiations to invest $10 billion into OpenAI in a funding round that would value the ChatGPT creator at more than $500 billion, according to Reuters. The investment would reportedly give OpenAI access to Amazon's Trainium chips, creating a symbiotic relationship between the two companies' AI ambitions.

On the product front, Amazon introduced its new Graviton5 processors, designed to help customers run cloud applications faster and more efficiently at lower cost as workloads become increasingly complex.

The Other Side Of The Coin

Not everything is expansion mode. Amazon is planning to lay off 370 employees, representing about 8.5% of its Luxembourg workforce. This comes after the company shared plans in 2025 to cut 14,000 jobs overall. Even fast-growing tech giants are finding areas to trim in pursuit of those margin improvements analysts keep talking about.

Stock Performance Tells A Mixed Story

Here's where things get interesting. Despite the strong fundamentals and steady insider buying from folks like Loeb, Amazon's stock has gained just 5.31% year-to-date. That's respectable, but it trails the 9.00% rise in State Street Consumer Discretionary Select Sector SPDR ETF (XLY) and significantly lags the 32.78% surge in ProShares Online Retail ETF (ONLN).

Even more striking, Amazon is underperforming its closest e-commerce competitors. Alibaba Group (BABA) has rocketed 77.64% higher this year, while PDD Holdings Inc. (PDD) is up 16.04%.

So what gives? Sometimes the market takes a while to price in fundamental improvements, especially when a company is investing heavily in future growth rather than maximizing short-term profits. Loeb's continued accumulation suggests he's betting that Amazon's AI and cloud investments will eventually translate into stock performance that matches the underlying business momentum. Whether he's right is the multi-billion dollar question.