Invest in Two Stocks Advised by Warren Buffett for Only $500 at Present
Bagging some extra investment funds? Look no further than two of Berkshire Hathaway's top picks: Amazon and American Express.
1. Amazon
Founded by Jeff Bezos in 1994, Amazon (AMZN 2.39%) has been a game-changer in the digital world. Its online retail dominance garnered impressive returns over the past decades, but that's not all. Buffett believes the real magic lies with Amazon's cloud computing services – Amazon Web Services, or AWS.
Heavy focus on AI technologies like Amazon Bedrock, which helps companies create AI agents, sets AWS apart. AWS capitalizes on a $297 billion growing cloud market, securing 30% of its share, as per Synergy Research. The growing demand for AI has led to the release of custom-designed processors, helping reduce costs for AWS's clients. The impressive third-quarter revenue increase of 19% underscores the potential rewards of this AI venture.
Currently, AWS contributes only 17% to Amazon's total revenue, but its impact on profits is profound – generating $10.4 billion of operating income in this very quarter. Lowering fulfillment center expenses through robotics technology promises even more boosts to Amazon's bottom line.
Analysts predict a 22% annualized earnings growth for Amazon over the coming years. Even after a potential 2025 stock assessment, their business prowess will continue to shine and reward investors for years.
2. American Express
American Express, joining Berkshire's portfolio since the late 1980s, tops Berkshire's list of oldest holding investments alongside Coca-Cola. As of recent years, AXP (American Express) stock delivers an impressive 69% return, with record revenue reported for Q3.
Full-year revenue growth for 20XX projects 9% rise, positioning American Express as a robust long-term investor choice. Moreover, American Express increased its 2024 earnings guidance range between $13.75 and $14.05, signaling a significant 24% midpoint rise.
American Express enjoys a loyal customer base with a positive brand image. This popularity translates into premium product sales, including Gold cards with a $325 annual fee and Platinum cards commanding $695 annually. American Express offers these fine members various perks, resulting in desirable merchant discounts. The company's steady income stream helps fuel its long-term growth potential.
Even in recession-prone times, American Express is likely to navigate relatively smoothly, particularly in a growing economy. With a mid-teens long-term earnings growth rate expected, AXP continues to attract value-seeking investors for decades to come.
- If you're considering finance and investing, Amazon's stock (AMZN) could be a solid choice due to its impressive returns and growing revenue, particularly from its cloud computing service, Amazon Web Services (AWS).
- American Express, another strong investment option, has been in Berkshire Hathaway's portfolio for decades and has delivered substantial returns. Its robust revenue growth and increasing earnings guidance make it a reliable long-term investment, even in challenging economic conditions.
