If I Could Only Buy 1 Artificial Intelligence (AI) Stock, It Would Be This Monster "Magnificent Seven" Member Approved by Billionaires Warren Buffett and Bill Ackman

Billionaire investors Bill Ackman and Warren Buffett both feature a particular "Magnificent Seven" member in their portfolios

Throughout the artificial intelligence (AI) revolution, Pershing Square's primary exposure to the stock market's megatrend has been through a position in Alphabet

Recently, however, Ackman made headlines after it was revealed that Pershing Square complemented its Alphabet position with another member of the "Magnificent Seven": Amazon (AMZN 2

Interestingly, Amazon is one of the few nology stocks in Warren Buffett's portfolio at Berkshire Hathaway

Moreover, I'll break down why the e-commerce and cloud computing giant is my top pick among AI stocks

How did Amazon attract both Buffett and Ackman

Ackman and Buffett built their fortunes in different ways

Buffett is best known for building positions in globally recognized brands and holding onto these stocks over the course of many years or even decades

In addition, many of Buffett's most lucrative investments have come from companies that consistently buy back stock or pay a dividend

Lastly, Buffett generally sticks to industries such as financial services, energy, and consumer goods -- rarely exposing Berkshire to more volatile such as the nology sector

On the other hand, Ackman tends to be a bit more industry-agnostic compared to Buffett

Moreover, from time to time Ackman will also fit from more sophisticated trading niques that involve derivatives

One philosophy that Buffett and Ackman do, however, is their love for value stocks

Neither investor is known for chasing momentum or overpaying for a stock trading with a lofty valuation

AMZN data by YCharts The chart above benchmarks Amazon's price action relative to other megacap AI and cloud computing stocks

While each stock above faced some pressure earlier this year, Amazon's decline was more nounced relative to its peers -- specifically throughout April

This is when Ackman pounced, buying the dip in Amazon stock during a period of notable valuation contraction

Furthermore, I think Amazon's diversified ecosystem spanning online shopping, cloud computing, subscription services, logistics, robotics, grocery dery, ing and entertainment, and more is another factor that played a role in the giant earning a spot in both Berkshire's and Pershing Square's portfolios

By operating across so many different end, Amazon is able to thrive under various economic conditions while also appealing to several different customer demographics

Buffett and Ackman may favor models this as it helps mitigate risk factors such as cyclicality, seasonality, and growth unpredictability

AI has monster potential to transform Amazon Given the ideas explored above, Amazon may not appear to be a traditional AI opportunity

But over the last few years, Amazon has quietly been transforming its through a series of AI-driven investments

Anthropic has become a key integration in Amazon Web Services (AWS), leading to sustained acceleration across revenue and fitability in the company's cloud computing

Amazon is also deploying AI robotics throughout its fulfillment centers

This move has the potential to generate significant cost savings by bringing new levels of automation and efficiency to the company's warehouses

Moreover, while companies IonQ or Rigetti Computing fetch the majority of attention in the quantum computing arena, Amazon is its own line of chipsets: Trainium, Inferentia, and Ocelot

Image source: Getty Images

Is Amazon stock a buy right now

Based on forward earnings multiples, Amazon stock isn't exactly a bargain right now

My hunch is that Amazon's diverse and robust growth spects may make the company appear to be more of a safe haven relative to other volatile, unpredictable opportunities in the AI realm

AMZN PE Ratio (Forward) data by YCharts Even so, I don't think Amazon has experienced the same level of valuation expansion that some of its Magnificent Seven peers (e. , Microsoft, Nvidia) have over the last couple of years

Furthermore, given how many different es AI stands to disrupt within the Amazon ecosystem, I think the company is uniquely positioned for sustained periods of robust growth

With that in mind, I think Amazon still has significant upside and I see a position in the stock as a superior opportunity compared to its peers

Investors with a long-run time horizon may want to consider initiating a position in Amazon stock despite its slight premium right now

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors

Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia

The Motley Fool has positions in and recommends Alphabet, Amazon, Berkshire Hathaway, Microsoft, Nvidia, and Oracle

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