Is Cathie Wood’s Increased Investment in Amazon (AMZN) a Smart Move?

Shares of Amazon (NASDAQ:AMZN) stock are in focus following several buys from Ark Invest’s Cathie Wood.

Yesterday, five out of the six Ark funds increased their positions in the e-commerce giant. These include the ARK Innovation ETF (NYSEARCA:ARKK) and the ARK Fintech Revolution ETF (NYSEARCA:ARKF). The ARK Genomic Revolution ETF (BATS:ARKG) was the only fund left out of the party, as its name suggests.

That wasn’t Wood’s only buy this week, as she loaded up $35 million worth of AMZN on Monday. Her Amazon purchases differ from her prior theme of speculative, high-growth companies.

According to Cathie’s Ark, Amazon now carries a 0.17% weight across all Ark ETFs. It tallies in as the 72nd largest position among them.

AMZN is down by about 9% since it reported its earnings on Aug. 1.

AMZN Stock: Cathie Woods Buys the Earnings Dip

During the quarter, Amazon’s sales grew by 10% to $148 billion, short of the analyst estimate for $148.8 billion. Its adjusted EPS of $1.26 topped the estimate for $1.04 and increased from 65 cents a year ago.

At the same time, the company’s cloud offering continues to show impressive growth. Amazon Web Services (AWS) grew by 19% to $26.3 billion, beating the estimate for $26 billion.

“We’re continuing to make progress on a number of dimensions, but perhaps none more so than the continued reacceleration in AWS growth,” said CEO Andy Jassy.

As for guidance, Amazon expects between $154 and $158.5 billion of sales for the third quarter or growth between 8% and 11%. This assumes a 90 bps drawdown from foreign exchange rates. Meanwhile, analysts were expecting much more at $158.43 billion.

AMZN has returned 12% this year, roughly in line with the S&P 500 and the Nasdaq 100. Meanwhile, its trailing P/E ratio of about 40x is currently near the 52-week low of 38.52x.

AWS is Amazon’s highest segment grower, and continued reacceleration will benefit AMZN. The company is also working on improving its e-commerce offerings, both in the U.S. and internationally. As long as it is able to increase its cloud and e-commerce market share, AMZN should continue to provide returns in line with or above the market.

On the date of publication, Eddie Pan held a LONG position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.