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Warren Buffett and Cathie Wood are like peas in a pod. At least that’s the case when the pods span millions of miles and two famous investors are at either end of the spectrum.
In reality, Buffett and Wood disagree on many stocks. However, there is one notable exception. This is the only artificial intelligence (AI) stock owned by Buffett and Wood as 2024 begins.
The positions of both famous investors are small.
Wood’s Ark Investment portfolio is packed with AI stocks. This is not surprising, given that Wood has been a vocal advocate of AI for years. Buffett is a different story. This legendary investor is well known for focusing only on stocks within his area of expertise. AI clearly doesn’t fit that bill.
However, both investors own only one AI stock. But admittedly, their stake in this stock is quite small.
Amazon (NASDAQ:AMZN) Accounts for 0.4% of Mr. Buffett berkshire hathaway portfolio. Berkshire initiated a position in Amazon in 2019, but Buffett acknowledged at the time that the decision was made by one of the company’s two investment managers. Still, he likes the company and the stock, telling CNBC, “Yeah, I’ve always been a fan, and I was an idiot for not buying it.”
Wood’s position in Amazon is even smaller. And the stock isn’t included in any of her exchange-traded funds (ETFs) that focus on AI. Instead, it includes Amazon. Ark Space Exploration & Innovation ETF. The company’s Project Kuiper satellite broadband network appears to have caught Wood’s attention.
Amazon’s AI story
Amazon hasn’t been very active in the world of AI lately. The company has been developing and using AI for over 20 years.
AI permeates the algorithms used in Amazon’s e-commerce platform. Every time a user sees a recommendation for a product to buy, it’s an example of a company’s AI at work. The e-commerce giant recently stepped up its efforts on this front, launching a generative AI tool to answer shoppers’ questions about products.
Amazon introduced the Alexa virtual assistant in 2014. Alexa is built into the company’s Echo, Firestick, and Kindle Fire devices.
But the bigger opportunity for AI for Amazon lies in its cloud services platform, Amazon Web Services (AWS). In comments on AWS’s Q3 earnings call, CEO Andy Jassy emphasized why he thinks AWS could be such a big winner in his AI space. he said, “[C]What the customer wants to bring is [AI] You don’t convert models into data, not the other way around. And much of that data resides on AWS, the clear market segment leader in cloud infrastructure. ”
Is Amazon a smart choice for low-profile investors?
Buffett’s Berkshire Hathaway has slightly reduced its position in Amazon in the third quarter of 2023. A few months ago, Mr. Wood’s Ark Invest released a report that downplayed large-cap AI stocks like Amazon in favor of smaller startups. However, I think there are several reasons to buy Amazon stock now.
The company’s earnings continue to improve significantly. Amazon’s management has focused on increasing profits by streamlining its operations across the board. These efforts are bearing fruit, as evidenced by more than tripling revenue in the third quarter of 2023 compared to the previous year.
Jassy has said in the past that roughly 90% to 95% of global IT spending is still on-premises, with the rest in the cloud. He believes these numbers will reverse in the next 10 to 15 years. I think he may be right. If so, AWS should see significant growth in the future.
Last but not least, Amazon hasn’t stopped finding ways to expand into new markets. Just last year, the company announced it would launch supply chain management services, introduce primary care services for Prime members and sell cars online. We look forward to further developments in the future.
In my view, Buffett and Wood would be wise to increase their stake in Amazon. And I think AI stocks are a smart choice even for lesser-known investors.
Should you invest $1,000 in Amazon right now?
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Keith Speights has positions at Amazon and Berkshire Hathaway. The Motley Fool has positions in and recommends Amazon and Berkshire Hathaway. The Motley Fool has a disclosure policy.
As 2024 begins, the only artificial intelligence (AI) stock both Warren Buffett and Cathie Wood own is originally published by The Motley Fool
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