Stanley Druckenmiller and Cathie Wood agree on 2 tech giant stocks

During the second quarter, investment managers Cathie Wood and Stanley Druckenmiller jointly purchased shares of Amazon and Alphabet, two major tech giants. Wood oversees long-duration disruptive growth funds, while Druckenmiller focuses on concentrated macro bets and adapts quickly to changes in his investment strategy. Druckenmiller's investment in Amazon was particularly noteworthy, with an increase of 1,083%, valuing his position at roughly $129 million.

Wood's stake in Amazon grew by 18%, reaching about 1.59 million shares worth $379 million, representing 2.46% of her portfolio. Similarly, both managers increased their investments in Alphabet, with Druckenmiller adding 336,300 shares worth around $120 million, making up 2.31% of his portfolio, and Wood raising her position by 45%, or approximately 1.04 million shares valued at $369 million, accounting for 2.46% of her portfolio.

The bullish case for Amazon is primarily driven by the strong performance of its Amazon Web Services (AWS) arm. AWS revenue grew by 37% year-over-year, with cloud revenue accelerating from 28% in the previous quarter to 37%. AWS backlog reached $496 billion, up $132 billion in a single quarter, and the division now generates $169 billion in annualized revenue.

Amazon's operating margin for AWS improved to approximately 39.4%, up 6.5 percentage points year-over-year. Amazon's shift towards building its own silicon, such as Trainium and Graviton chips, enables the company to offer lower prices for compute services while maintaining profitability. However, Amazon's trailing 12-month free cash flow turned negative by $7.6 billion, and the company raised its 2026 capital expenditure outlook to $220 billion, highlighting concerns about capacity to meet demand.

Additionally, customer concentration risk exists, as a significant portion of AWS growth is tied to AI labs, including OpenAI and Anthropic. As for Alphabet, both Druckenmiller and Wood have a diversified exposure to the company's various AI-related products and services, such as Google Search, YouTube, and Google Cloud. While Amazon primarily focuses on providing infrastructure for AI, Alphabet operates on both the infrastructure and monetization fronts through its search and video platforms.

Despite the high valuation of both stocks, their growth outlook remains compelling, especially as they capitalize on the AI buildout, which investors believe has significant room for growth.