Warren Buffett is one of the most successful investors of all time. His Berkshire Hathaway portfolio is a valuable snapshot of the equities he believes are destined for long-term success. His vote of confidence is more important than ever in an increasingly uncertain global economy.
Let’s explore why a $1,000 bet on Amazon (AMZN -5.35%) or BYD (BYDDY 3.27%) could turn into significantly more over the long term.
Amazon
Berkshire Hathaway owns 10 million shares of Amazon, worth roughly $1.75 billion at the time of writing. That’s a relatively small holding compared to major portfolio components like Apple (worth $54.4 billion) or American Express (worth $35.5 billion). But it is a signal that Buffett is optimistic about Amazon’s future. It’s easy to see why.
Buffett likes to bet on companies with deep economic moats, which refers to a competitive advantage they use to protect themselves from competition. For Amazon, this boils down to size. As the undisputed leader in U.S. e-commerce and global cloud computing (with market shares of 38% and 30%, respectively), the company can leverage economies of scale to lower prices to maximize service to its consumers.
To be fair, Trump’s global tariffs (which he placed on a 90-day hold this week) could represent a near-term challenge for consumer spending. However, Amazon is insulated from this because its cloud computing segment, Amazon Web Services (AWS), represents around half of its operating income. Digital goods and services have not been subject to tariffs or trade restrictions.
With shares down 16% year to date, Amazon’s valuation is becoming increasingly attractive. The stock’s forward price-to-earnings (P/E) of 28 represents only a slight premium over the Nasdaq-100‘s estimate of 27.
BYD
Berkshire Hathaway was a relatively early investor in BYD, betting $230 million on the Chinese electric vehicle (EV) start-up for just $1.02 per share. Now, that equity stake is worth $2.24 billion, making it an important part of Buffett’s long-term investment strategy.
BYD’s business is soaring. In 2024, the company’s revenue hit a whopping $107 billion, putting it ahead of Tesla, which generated $97.7 billion in the same period. Furthermore, BYD is poised to rapidly gain market share across the world. While it faces tariff barriers in major markets such as the EU (where it is charged 17% on top of a 10% import duty), it is bypassing this by opening new factories within the bloc.
Image source: Getty Images.
The company is building new plants in Hungary and Turkey, with plans to build a third facility in Germany. This comes as major rival Tesla is beset with political protests and market share declines across the continent, giving BYD an opportunity to capitalize.
Like Amazon, BYD fits into Buffett’s investing philosophy because of its deep economic moat. Much of the company’s success can be credited to its vertically integrated supply chain. The company makes its own batteries and motors instead of relying on third-party suppliers. This strategy lowers production costs, allowing BYD to pass savings on to consumers and undercut its competition.
It’s a challenging time in the markets
It’s difficult to ignore the enormous volatility sparked by the Trump administration’s on-again, off-again tariffs. Even Warren Buffett seems to be spooked — as of February, Berkshire Hathaway is holding a whopping $334 billion in cash and equivalents compared to around $245 billion in public stock. This dynamic suggests Buffett believes there is more risk of downside in the market.
But while investors may want to wait for the dust to settle before buying any stock right now, Amazon and BYD look like great ways to bet on a rebound when some of the geopolitical uncertainty clears up.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. American Express is an advertising partner of Motley Fool Money. Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, and Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.
