Warren Buffett’s Legacy: Why Amazon and BYD Remain Strong Buys

Warren Buffett plans to retire this year, achieving over 5,000,000% returns for long-term investors through his holding company, Berkshire Hathaway. With a market capitalization of $1.12 trillion, Berkshire is substantial; however, investors should not anticipate a repeat of the growth seen in the past six decades.

Nevertheless, Buffett’s portfolio provides valuable insights into the market. Let’s examine two Berkshire-backed stocks—Amazon (NASDAQ: AMZN) and BYD (OTC: BYDD.F)—that could represent solid investment opportunities.

Amazon

Even seasoned investors occasionally overlook potential. Warren Buffett admitted he was “too dumb” to recognize Amazon’s initial value. However, he invested in early 2019, and Berkshire Hathaway now holds $1.89 billion in Amazon shares, accounting for 0.7% of its portfolio.

Buffett’s interest in Amazon is clear. The company’s economic moat is robust. Amazon’s size fosters a positive feedback loop: more buyers attract additional sellers, resulting in increased competition and product diversity. The company leverages economies of scale within its logistics and distribution to pass savings onto consumers.

Challenges may arise from the Trump administration’s new tariffs on imports; however, Amazon’s third-party business model allows it to shift some costs to marketplace sellers.

Moreover, Amazon’s diversification is a crucial long-term asset. Its cloud computing unit, Amazon Web Services (AWS), contributes about half of operating income, which reduces reliance on consumer spending and allows the company to capitalize on growth sectors like generative artificial intelligence (AI). Amazon focuses its AI strategy on aiding other businesses to run and train their models.

BYD

Berkshire Hathaway holds a significant $2.68 billion stake in BYD, having invested in the Chinese EV manufacturer since 2008. Similar to Amazon, BYD exemplifies how building a solid economic moat is critical for success.

BYD’s advantage lies in its vertical integration. Originally a battery maker, BYD has used its expertise to manage a significant part of its supply chain, producing its own batteries and securing rights to essential lithium mines. This strategy helps lower costs and enables rapid production scaling.

In 2024, BYD surpassed its American competitor, Tesla, becoming the world’s top-selling EV brand with revenue reaching $107 billion.

Image source: Getty Images

While tariffs may prevent BYD’s vehicles from entering the U.S. anytime soon, the company has vast expansion opportunities globally. Management plans to double international sales to 800,000 by 2025, avoiding tariffs by manufacturing locally. Tesla’s challenges in the EU provide BYD a chance to increase market share.

At a forward price-to-earnings (P/E) ratio of just 21, BYD’s shares are attractively priced. In comparison, Tesla has a forward P/E of 127.

Buffett’s Cash Reserves

While Amazon and BYD are significant in Berkshire Hathaway’s portfolio, they are minor compared to the company’s cash reserves, which reached a record $334 billion by the end of 2024 following $134 billion in stock sales last year.

Buffett’s cautious stance suggests he may be wary of the overall stock market, especially given the trade policy volatility. Amazon and BYD are solid long-term choices, but investors should consider diversifying their portfolios to mitigate risks in the current market environment.

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