Druckenmiller’s Wagers: A Curious Tale of Stocks and Such

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Now, there was this fella, Stanley Druckenmiller, a man who could seemingly coax a profit out of thin air for nigh on three decades. Never a down year, they say! Closed up his hedge fund in 2010, he did, but a man with his knack for figures doesn’t just sit on the porch swing, no sir. He manages his own wealth, and folks keep a weather eye on what he’s up to, for a reason. It’s a curious thing, seein’ where the money flows.

This past quarter, or rather, four months gone by, he made a couple of moves that tickled the fancy of the market watchers. He parted ways with his holdings in Microsoft, a company that’s grown like a weed, and took a shine to Amazon, a concern that’s seen a rise of 243,600% since it first sprouted, nearly 30 years ago. A lesson in this, perhaps? Even a sturdy oak can be surpassed by a quicker-growin’ vine. Though I reckon a fella shouldn’t build his whole farm on such fleeting whims.

But let’s not get carried away with old news. That was back yonder. A wise man looks to the present, not the past. So, let’s take a closer look at these two enterprises, and see if they’re still worth a dime.

Microsoft: A Sold Story?

Microsoft, it seems, did rather well in the last quarter. Their earnings beat expectations, revenue up a good 17% to $81 billion, driven by software and cloud services. Not a bad showing, I’ll grant you. But then, a curious thing happened. The stock took a tumble. Seems investors got their knickers in a twist over increased capital expenditures – they’re investin’ heavily in artificial intelligence, you see. A bit like buildin’ a grand cathedral when you’ve barely got enough lumber for a chicken coop. Still, a temporary dip like that can present an opportunity for a shrewd investor.

The strength of Microsoft lies in its enterprise software and cloud services. The market for both is predicted to grow handsomely – 12% annually for software and 16% for cloud computing, according to some fellows who spend their days countin’ beans. And this AI business? It’s central to their plans. They’ve added these “copilots” to their software, makin’ things easier for folks. Paid seats for these copilots increased a whopping 160%, and daily users tenfold. A sight to behold, if you’re fond of numbers.

They also have this “Foundry” service, a cloud thingamajig that brings together tools and models for buildin’ AI agents. More than 80% of the Fortune 500 uses it, and customers spendin’ over a million dollars a quarter increased nearly 80%. A considerable sum, even for those who swim in money. The stock’s down 24% from its high, makin’ it more attractively priced than when Druckenmiller decided to move on. It trades at 27 times earnings, which seems reasonable for a company expectin’ 15% annual growth through 2027.

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Amazon: A New Venture?

Now, Amazon, that’s a different kettle of fish altogether. They also beat expectations in the last quarter, revenue up 13% to $180 billion, driven by advertising and cloud services. Their CEO, Andy Jassy, says AI is drivin’ improvements across the business. A bold claim, but then, CEOs are known for their optimism.

Amazon’s strength lies in online retail, digital advertising, and cloud services. Retail e-commerce is predicted to grow 12% annually, adtech spending 14%, and cloud computing 16%. A good pace for any enterprise. They’ve integrated AI across their businesses, usin’ it to forecast demand, manage inventory, coordinate robots, and optimize deliveries. They’re even developin’ a system where warehouse workers can instruct robots in plain English. A bit like havin’ a mechanical butler, if you ask me.

In cloud computing, Amazon Web Services is monetizin’ AI at every level – custom chips, Nvidia GPUs, services like Bedrock and SageMaker, and generative AI tools. A complex web, to be sure, but it seems to be workin’.

The stock averaged $220 during the third quarter, when Druckenmiller took a position. It’s slightly more expensive now, but at 33 times earnings, it’s still reasonable, especially considerin’ they’ve beaten earnings estimates by an average of 23% in the last six quarters. A consistent performer, it seems.

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2026-02-05 12:33