Two Buffett Stocks Worth Considering for Long-Term Investment

With stock prices fluctuating significantly, identifying strong investment opportunities can be challenging. During times of uncertainty, many investors turn to seasoned veterans for guidance. Few names resonate more than Warren Buffett, the billionaire investor and CEO of Berkshire Hathaway, who has built a portfolio valued at $250 billion. His investment choices consistently prove resilient through market ups and downs.

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If you’re searching for reliable companies to consider for long-term investment, here are two standout stocks endorsed by Buffett.

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1. Amazon: Dominance in E-Commerce and Cloud Computing

Current skepticism surrounds Amazon (NASDAQ: AMZN), particularly due to many sellers’ reliance on goods imported from China amidst ongoing trade tensions with the U.S. An economic downturn could impact Amazon’s sales figures.

While these concerns are valid, they may be overstated. Amazon commands approximately 40% of the U.S. e-commerce market, far outpacing competitors like Walmart which holds just 7%. This market dominance suggests that even during economic fluctuations, consumers are likely to continue frequenting Amazon for their purchases.

Moreover, potential tariff impacts would reflect across the retail landscape, affecting Walmart significantly as well. Amazon’s position remains robust, and if tariffs eventually ease—albeit at an uncertain pace—the company’s standing in e-commerce will remain intact.

Importantly, Amazon Web Services (AWS), its cloud computing segment, is a major revenue driver. In the previous year, AWS contributed 58% of Amazon’s operating income while representing only 17% of total sales. Currently, AWS leads the market with a 30% share, outpacing Microsoft’s 21%. The surge in artificial intelligence is projected to boost cloud revenue, with Goldman Sachs estimating it will reach $2 trillion in five years.

While Amazon stock may experience short-term volatility in a challenging economy, its positions in e-commerce and cloud computing suggest a favorable long-term investment outlook. As of late 2024, Berkshire Hathaway maintains 10 million shares in Amazon.

2. American Express: A Timeless Buffett Holding

Similar to Amazon, American Express (NYSE: AXP) can face challenges during an economic slowdown. With U.S. credit card debt at an all-time high of $1.21 trillion by the end of 2024, financial pressures could lead cardholders to cut back on discretionary spending, negatively impacting American Express.

However, it’s important to note that economic downturns tend to be temporary, with recessions lasting, on average, 17 months. American Express is poised for continued growth despite potential short-term spending reductions.

In 2024, the company reported a 9% revenue increase to $65.9 billion, with earnings per share (EPS) soaring 25% to $14.01. Management anticipates EPS to grow by 14% and sales to rise by 9% this year, according to guidance metrics.

The firm’s resilience is bolstered by the addition of 13 million new cardholders in the past year, 70% of whom use products that incur annual fees. Buffett has long favored American Express, first acquiring shares in 1991. Even as he has reduced other holdings, American Express remains Berkshire’s second-largest investment.

Additionally, American Express is currently valued at a price-to-earnings multiple of 16.7, down from 20 last year, offering investors an opportunity to acquire shares at a more attractive valuation.

Despite any lingering doubts about investing in a credit card company during economic uncertainty, American Express appears to be a sound asset for future growth potential.

A Vital Lesson from Buffett

Warren Buffett once said, “We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” This reminder resonates as investors navigate market fluctuations and contemplate adding Buffett-endorsed stocks to their portfolios.

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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. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, Goldman Sachs Group, Microsoft, and Walmart. The Motley Fool recommends specific options on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.