Why Did Buffett Dump Amazon?

By Douglas A. McIntyre Published Feb 18, 7:47AM EST

Quick Read

Buffett’s Last Quarter As Berkshire CEO
Sold Huge Portion Of Amazon Stock
Also Sold A Great Deal Of Apple
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In his final quarter as CEO of Berkshire Hathaway (NYSE: BRK-B), Warren Buffett reallocated his technology holdings. In the process, he sold 75% of his Amazon (NASDAQ: AMZN) position, according to Bloomberg. He has held the stock since 2019.

Buffett also reduced his investment in Apple (NASDAQ: AAPL | AAPL Price Prediction), a move he has made for several quarters.

Like many of the world’s largest investors, Buffett does not always provide a rationale for buying or selling a stock.

Notably, Amazon’s stock has declined 12% over the past year, whereas the S&P is 12% higher. Another contrast is Alphabet’s (NASDAQ: GOOG) stock, which is up 62% over the same period.

What follows is a guess. Amazon has been the leader in cloud computing for several years. However, Microsoft (NASDAQ: MSFT) has recently begun to close that lead based on market share. Amazon’s was 29% late last year. Microsoft’s share rose to 20%. Google is also rising and stands at 13%.

Amazon’s revenue remains dominated by its legacy business. Last year, e-commerce was 82% of its $717 billion in total revenue. However, this business accounted for only 43% of operating income. AWS was 18% of revenue and 57% of operating income. Amazon’s legacy business, founded in 1994, remains a very important part of the company.

And then there is Amazon’s position in the AI sector. It is not clear who will be the leader in that industry in five years. However, it is clear that Amazon faces numerous competitors, including Nvidia (NASDAQ: NVDA), Microsoft, Alphabet, and OpenAI, among others. If it makes investments like the others, its data center investment will run well into the hundreds of billions of dollars.

The losers in the AI race will have invested what could be a crippling amount of money, and have very little to show for it. Buffett may have been anxious about that.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.