Stanley Druckenmiller and his Duquesne Family Office has been a great hedge fund for investors to track. Because it has more than $100 million in assets, it is required to report holdings to the Securities and Exchange Commission at the end of each quarter. Then, 45 days later, that information is released to the public in a form 13F so observers can track its moves.

In the fourth quarter, Druckenmiller opened a new position in Amazon (AMZN -2.83%). Prior to the fourth quarter, he didn't own any Amazon shares. However, the fund bought $72 million worth of shares in the quarter, making it around 2% of the total portfolio value. I think this is a great move because Amazon has a ton going for it right now.

Amazon's most important divisions are advertising and cloud computing

When you hear Amazon, the first thing that pops into your mind is likely to be its e-commerce platform. This is the most public-facing part of the business, but I think there are far better reasons to own the stock.

One of them is that e-commerce doesn't provide a lot of growth. In the fourth quarter, the online-stores segment grew its revenue 7% year over year to $75.6 billion. That's still the company's largest segment by volume, but it grew the slowest of any of Alphabet's businesses. Instead, investors should focus on other divisions, like Amazon Web Services (AWS) and advertising.

These two divisions have grown to become massive chunks of the company's business, combining for $46.1 billion in revenue in the fourth quarter. AWS recently overtook advertising as Amazon's fastest-growing segment, rising 19% year over year compared to advertising's 18% increase. However, the key point with both of these businesses is how much they boost profitability.

While Amazon doesn't break out the profitability of its subscription service division, many companies (like Alphabet and Meta Platforms) derive a significant chunk of revenue from advertisements. These companies consistently post much higher profit margins than commerce companies, so it's clear that this segment boosts Amazon's profitability, too.

Luckily for investors, management breaks out its AWS cloud computing segment's financials. In the fourth quarter alone, it generated $10.6 billion in operating profits. That accounted for 50% of the company's total operating profits, clearly a huge part of Amazon's income.

However, the true effect of AWS is far greater than that. The fourth quarter is a strong commerce quarter due to the amount of holiday spending that Amazon experiences. This allows the company to produce a larger profit from these divisions.

So, to better understand how important AWS is to Amazon, let's look at the operating income produced over the past 12 months. Using that figure, AWS' share of operating profit rises to 58%. With that segment's growth expected to continue for many years, this should become the most important part of the business over the next few years.

Druckenmiller knows this, which is probably one reason his firm opened a position in the fourth quarter. But is it still worth buying at today's prices?

Amazon's stock doesn't appear to be cheap

As mentioned above, the snapshot of the Duquesne Family Office occurred on Dec. 31, 2024, but observers are just now learning about its moves. However, since the start of 2025, Amazon's stock has only risen around 3%, so the price hasn't changed much.

As for valuation, its stock trades for 36 times forward earnings.

AMZN PE Ratio (Forward) data by YCharts

While this isn't a cheap stock by any means, it is cheaper than it has been in some time. Furthermore, the company's forward price-to-earnings ratio (P/E) isn't optimized because CEO Andy Jassy and his team are still working on making the commerce division more profitable.

And investors know that Amazon's fastest-growing segment is far more profitable than its primary business. So, as this growth continues for many years, profit margins will naturally rise alongside it.

This means that the company's profit picture could be radically different five years from now, which is why investors like Druckenmiller are willing to take a position in a stock that looks a tad pricey compared to other big tech stocks. As a result, I think Amazon is a great buy today as long as investors are willing to hold on to shares for the long term (at least three to five years).