The largest S&P 500 holding in my ISA is…

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The S&P 500 index has been an incredible wealth generator over the last decade. Personally, I’ve made big gains on a number of stocks in the index including Apple, Alphabet, and Nvidia.

As for my largest S&P 500 holding today, it’s a Mag 7 stock. But it’s not one of the names mentioned above.

A tech powerhouse

Instead, it’s Amazon (NASDAQ: AMZN). This is the company I’m most confident in from a long-term risk/reward perspective.

What I love about Amazon is that it’s a really diversified business. Ultimately, it’s a technology conglomerate. Everyone knows that it’s a powerhouse in e-commerce. This division underpins the group, generating a huge amount of cash flow for the company every year (group operating cash flow last year was $140bn).

One competitive advantage the company has here is that it has hundreds of millions of Prime members. These customers (myself included) tend to do a lot of shopping on the platform.

Looking beyond e-commerce, Amazon’s the largest player globally in cloud computing. This division continues to generate strong growth (24% growth in Q4 2025).

Note that in the years ahead, the cloud computing industry is expected to see rapid growth due to the AI revolution. So Amazon has some powerful tailwinds here.

A major player in AI

Speaking of AI, Amazon’s a big player here. A good example is its AI chips. In its recent annual letter, the company said that if it was selling its chips to third parties, it would be generating annual revenue of around $50bn. In other words, it’s fast becoming a major competitor to Nvidia.

It’s also worth pointing out that Amazon’s a major investor in AI powerhouse Anthropic. It owns around 15%-20% of this company.

Digital advertising growth

Additionally, Amazon’s a dominant force in digital advertising. Today, it’s the third largest player behind Alphabet and Meta. In Q4, this area of the business grew 22% year on year to $21bn. So this is a whole new growth driver for the group.

Space revenues

One other area of the business worth mentioning is space. Over the last decade, Amazon’s built its own low earth orbit satellite network with more than 200 satellites.

This is scheduled to launch in mid-2026. However, already the company has meaningful revenue commitments from the likes of Delta Airlines, NASA, and Vodafone.

Many ways to win

Looking beyond all this, Amazon’s also a force in robotics (it has over a million robots operating in its factories), self-driving cars (its Zoox cars are in operation in the US today), and digital healthcare (its platform now offers weight-loss drugs).

So overall, it has many ways to win. That’s one of the reasons I see the risk/reward skew as attractive.

Another is the valuation. Today, the stock trades on a mid-20s price-to-earnings ratio. I see that multiple as very reasonable given the long-term growth potential. That’s why I’m comfortable with a large position.

Worth a look?

Of course, there are plenty of risks. One is in relation to the amount of money the company’s spending on AI ($200bn this year) – it may not pay off. Another is a consumer slowdown. This could hurt e-commerce growth.

Overall though, I’m very bullish here. I think Amazon’s worth a closer look today.

But it’s not the only S&P 500 name I like right now…

The post The largest S&P 500 holding in my ISA is… appeared first on The Motley Fool UK.

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Edward Sheldon has positions in Amazon, Apple, Alphabet, and Nvidia. The Motley Fool UK has recommended Alphabet, Amazon, Apple, Meta Platforms, Nvidia, and Vodafone Group Public. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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