What Makes Amazon.com (AMZN) a Lucrative Investment?

Heartland Advisors, an investment management company, released its third-quarter 2025 investor letter for its “Heartland Opportunistic Value Equity Strategy.” A copy of the letter can be downloaded here. In Q3, trends from Q2 continued, with rising optimism about the AI boom and increased electricity demand driving large- and mid-cap growth stocks to new highs, regardless of business model quality or valuation. The strategy returned 4.65% in the quarter, compared to a 5.63% return for the Russell 3000 Value Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, Heartland Opportunistic Value Equity Strategy highlighted stocks such as Amazon.com, Inc. (NASDAQ:AMZN). Amazon.com, Inc. (NASDAQ:AMZN) provides consumer products, advertising, and subscription services through online and physical stores. The one-month return of Amazon.com, Inc. (NASDAQ:AMZN) was -6.19%, and its shares gained 9.58% of their value over the last 52 weeks. On December 01, 2025, Amazon.com, Inc. (NASDAQ:AMZN) stock closed at $233.88 per share, with a market capitalization of $2.5 trillion.

Heartland Opportunistic Value Equity Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its third quarter 2025 investor letter:

"During the quarter, we initiated a position in the online retailer and cloud computing giant Amazon.com, Inc. (NASDAQ:AMZN). Until recently, Amazon traded at a meaningful premium to the S&P 500 Index and retail juggernaut peers. Management tends to invest capital in massive waves, which creates significant earnings noise. For example, AMZN doubled its retail distribution center footprint in 24 months following the COVID-19 pandemic, causing the company’s free cash flow and profit margins to drop. Today, however, the areas management is aggressively investing in — such as Amazon Web Services (AWS) and advertising— are high-margin businesses. That should lead to better long-term profitability despite likely short-term headwinds created by costs added ahead of incremental revenue.

Today, the company is spending big on AI infrastructure, which should allow it to sell more computing power via AWS while also making the company more efficient via process automation. Historically, Amazon was seen as more capital-intensive than large-tech competitors including Alphabet (Google), Microsoft, Oracle, and Meta (Facebook). Today, AMZN is the most capital efficient operator as measured by capital expenditures relative to sales. For example, a former holding is investing so aggressively that the company is free cash flow negative for the first time in the company’s public history. Yet the market has rewarded these investments with a much higher valuation..." (Click here to read the full text)

Amazon.com, Inc. (NASDAQ:AMZN) is in first position our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 332 hedge fund portfolios held Amazon.com, Inc. (NASDAQ:AMZN) at the end of the third quarter, which was 325 in the previous quarter. In Q3 2025, Amazon.com, Inc. (NASDAQ:AMZN) reported $180.2 billion in revenue, up 12% year-over-year. While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Amazon.com, Inc. (NASDAQ:AMZN) and shared the list of best consumer cyclical stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.