3 Stocks the Smart Money Is Quietly Buying in August

By Joel South Published Aug 17, 7:00AM EDT

Quick Read

Institutions hold between 76 and 81 percent of Microsoft and Alphabet, while Berkshire's new 48-million-share GOOGL stake signals deepening smart-money conviction in both names.
AWS just posted its fastest growth in 18 quarters at 37%, backed by a $496 billion backlog, while Azure crossed $100 billion in annual revenue, up 41%.
All three companies are burning cash to build capacity, with Amazon's free cash flow turning negative at -$8 billion after $53 billion in capex in Q2 alone.
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3 Stocks the Smart Money Is Quietly Buying in August — © 24/7 Wall St.

August’s action shows an interesting divergence. Mega-cap tech has cooled off the highs while institutional ownership across the biggest cloud franchises keeps grinding higher. Berkshire Hathaway’s disclosure of a new 48-million-share Alphabet position is the loudest signal, but the quieter tell is in the ownership stats: institutions hold 76.36% of Microsoft, 81.17% of Alphabet, and 68.69% of Amazon. When multi-quarter capex commitments start showing up in contracted backlog, professional money tends to accumulate through the noise.

Three names stand out this month, each backed by concrete data on cloud acceleration, AI monetization, and analyst positioning.

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT | MSFT Price Prediction) closed Thursday at $495.40, up 25.22% over the past month after the fiscal Q4 report. The setup here is unusual: the stock is trading roughly 3% below its 52-week high of $550.24, yet analyst positioning has firmed. 54 of 57 covering analysts rate the stock Buy or Strong Buy, with a $567.20 consensus target.

The bull case starts with the backlog. Commercial remaining performance obligations grew 84% to $678 billion, and Azure crossed $100 billion in annual revenue, up 41%. Q4 revenue of $90 billion grew 18%, with non-GAAP EPS of $4.74. Microsoft 365 Copilot passed 30 million paid seats, and CEO Satya Nadella noted that "Azure revenue surpassed $100 billion for the first time". At 27x trailing earnings, investors are paying a reasonable multiple for a business compounding earnings at 31.7% year over year.

Risk to watch: capex intensity is real. FY2026 capital expenditures ran $115.95 billion, up 79.62%, and Q4 free cash flow of $19.6 billion reflects that squeeze. Any deceleration in Azure bookings and the market will re-rate quickly.

Alphabet (GOOGL)

Alphabet (NASDAQ:GOOGL) is the cheapest of the three at a 17x trailing P/E with a PEG of 0.969. Shares finished Thursday at $345.90, up 10.65% year to date and 70.93% over the trailing year. Berkshire’s recently disclosed 48-million-share position is the headline institutional endorsement, and it lands alongside a Q2 report that keeps looking better on re-read.

Google Cloud revenue accelerated to $24.77 billion, up 82% year over year, from 63% growth in Q1. Total Q2 revenue of $119.80 billion grew 24.2%, and operating income of $40.77 billion rose 30% as the operating margin expanded to 34%. CEO Sundar Pichai flagged that "nearly 90% of the Fortune 100" now uses Gemini Enterprise, with the Gemini App at 950 million monthly active users. Analyst coverage has become one-sided: 58 of 64 covering analysts rate the stock Buy or Strong Buy with a $428.04 target.

Risk to watch: free cash flow turned negative to -$5.86 billion in Q2 as Alphabet raised roughly $70 billion in equity and debt to fund its AI buildout, and long-term debt jumped from $46.5 billion to $98.2 billion. The buyback pause is a warning that management is prioritizing capacity over per-share optics for now.

Amazon (AMZN)

Amazon (NASDAQ:AMZN) closed at $262.65, up 13.79% year to date. Analyst enthusiasm is the strongest in the group: 59 of 62 covering analysts rate the stock Buy or Strong Buy with a $325.19 consensus target.

Q2 revenue of $200.61 billion grew 19.6%. AWS grew 36.7% year over year, its fastest pace in 18 quarters, on an annualized run rate of $169 billion with an operating margin of 39%. AI and custom chips each cleared $25 billion annualized run rates growing triple digits, and the AWS backlog stands at $496 billion. Advertising revenue of $19.81 billion grew 26%. CEO Andy Jassy told the call that "AWS is booming right now" and management now believes AWS "will be at least double" the few-hundred-billion revenue base they long modeled.

Risk to watch: free cash flow has turned negative on a TTM basis at -$7.6 billion after $53.1 billion of cash capex in Q2 alone. Investors are underwriting the 2027 capacity doubling before it monetizes, and at 36x earnings, the multiple leaves little room for a demand air pocket.

What to Watch Next

All three names are running the same playbook: absorb an unprecedented capex cycle, convert it into contracted cloud backlog, and monetize AI seats and tokens on top. The tell will be Q1 fiscal 2027 Azure guidance (Microsoft has already pointed to roughly 45% growth in constant currency), the trajectory of Google Cloud’s 82% run rate, and whether AWS holds its 18-quarter high in growth. If any of those cracks, the smart-money accumulation thesis needs re-underwriting. Until then, the setup keeps rewarding patience.

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About the Author Joel South →

Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.

He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.