Amazon (AMZN): Why Warren Buffett Thinks the Stock Could Double
March 30, 2025 :- Amazon (NASDAQ: AMZN) has been a powerhouse in e-commerce, cloud computing, and digital services for years. But recent insights from legendary investor Warren Buffett suggest that the company's stock may be poised for a significant rally—potentially doubling in value.
Buffett’s Evolving Stance on Amazon
For much of his career, Buffett steered clear of tech stocks, preferring traditional businesses with stable earnings. However, in 2019, Berkshire Hathaway (NYSE: BRK.A, BRK.B) made a notable shift, acquiring shares of Amazon. While Buffett himself did not make the purchase—his investment managers Todd Combs and Ted Weschler were responsible—it marked a pivotal change in Berkshire’s strategy.
Buffett has openly admitted to underestimating Amazon's potential in the past. In an interview, he stated, “I was too dumb to realize what was going to happen,” acknowledging Jeff Bezos' brilliance in building a dominant global business. Now, his firm’s investment suggests strong confidence in Amazon’s continued growth.
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Key Drivers Behind Amazon’s Growth Potential
- Amazon Web Services (AWS): AWS, Amazon’s cloud computing division, continues to be the company’s most profitable segment. As demand for cloud services rises, AWS is positioned to capitalize, driving revenue and margins higher.
- E-Commerce Dominance: Despite global economic fluctuations, Amazon’s e-commerce business remains strong. With its Prime membership model and continued expansion into new markets, the company has built an unparalleled logistics and fulfillment network.
- AI and Digital Advertising Growth: Amazon is increasingly investing in artificial intelligence and machine learning, enhancing customer recommendations and advertising revenue. The company’s ad business is now a multi-billion-dollar enterprise, competing with Google and Meta.
- Cost-Cutting and Profitability Focus: Amazon has shifted its strategy from aggressive expansion to efficiency and profitability. The company has been streamlining operations, reducing expenses, and focusing on margin improvement, which could lead to stronger financial performance.
Could Amazon’s Stock Really Double?
Several Wall Street analysts project Amazon’s earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of over 30% in the next few years. If the stock maintains its current price-to-earnings (P/E) ratio while earnings expand, a doubling of the stock price within the next few years is a plausible scenario.
While Buffett’s investment in Amazon is still a fraction of Berkshire Hathaway’s massive portfolio, it reflects an acknowledgment of the company's long-term potential. With strong fundamentals and multiple revenue streams, Amazon remains a compelling stock for investors eyeing long-term gains.
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