Amazon (AMZN) has been a top performing growth stock that investors have loved holding for many years, with shares up nearly 900% in the past decade. That dynamic is unlikely to change, given the company’s status as a leading cloud provider via its AWS division and the incredible earnings growth Amazon has generated in the past. 

For retail investors, that’s a story worth buying. But the so-called “smart money” also continue to pile into this Magnificent 7 stock. 

Pershing Square’s Bill Ackman, a famous billionaire investor, has just disclosed a new stake in the e-commerce and cloud giant. With Amazon stock continuing to tear higher over recent weeks (up nearly 10% over the past month), perhaps this is a stock that others should follow Mr. Ackman into.

Let’s dive into whether this is the case.

Does Wall Street Agree with Ackman on Amazon?

Bill Ackman isn’t the only highly educated finance expert that’s bullish on Amazon. In fact, most of Wall Street appears to be on one side of the boat, with more “Buy” ratings than “Sell” atings on AMZN stock. With 53 analysts in coverage, 46 have a “Strong Buy rating, five have a ”Moderate Buy" rating, and just two have a “Hold.” 

The current consensus price target for Amazon of $240.69 implies upside of a little less than 20%. This further emphasizes that analysts continue to see Amazon as a “Buy” here.

We'll have to see how things develop. But given that Amazon stock was trading well below its Street-low target of $195 a few weeks ago, it is fairly safe to assume that professionals see the risk-reward balance as favorable and are betting on more upside. 

What Do the Fundamentals Say?

From a fundamentals perspective, there is a lot to like about Amazon’s current multiple. Although its forward price-earnings ratio is steep at just below 32x, Amazon is expected to grow its earnings at a better-than-20% rate over the coming years. That implies a forward PEG ratio of under 1.5x, a level that is historically cheap for this growth juggernaut. 

I think there are certainly potential headwinds that could derail the recent rally in AMZN stock, and Amazon will not be immune from recessionary pressures down the line. That said, with a robust return on equity of more than 24% and a very manageable debt load, this is a company that looks well-positioned to provide tantalizing growth. 

The Bottom Line: Is Amazon Stock a Buy? 

I believe that Amazon will likely continue to be a dominant force in its key operating segments. So, for investors who are bullish on the future growth the e-commerce and cloud businesses should provide, this is a cash flow machine that is certainly worth considering on any meaningful downturns.

Bill Ackman appears to be doing just that, with this recent purchase announcement indicating he sees significant value in holding this stock at current levels. And while Ackman may be more active than the average buy-and-hold retail investor, I do think the analysis Mr. Ackman has no doubt done should portend well over the long term.

I’ll be watching to see how long his Pershing Square maintains its position in Amazon, and whether Ackman decides to add to this position over time or eventually sell. But I also think that most of Wall Street is likely going to keep being right on Amazon and its upside potential. It’s a buy for me, for now.