We recently published an article titled Growth Stock Portfolio: 12 Stock Picks By Warren Buffett. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against the other growth stock picks by Warren Buffett.

Warren Buffett’s Berkshire Hathaway portfolio has long been a beacon for value investors looking for high-quality businesses with long-term competitive advantages. Since taking over as CEO of Berkshire six decades ago, the appropriately named “Oracle of Omaha” has outperformed the broader market.

As we approach 2025, some of Berkshire’s assets stand out as promising opportunities, combining excellent fundamentals with acceptable values despite the market’s sustained emphasis on technology and growth stocks.

Berkshire’s CEO is a strong believer in portfolio concentration. Buffett’s investment strategy revolves around choosing companies with significant competitive advantages, effective management teams, and the potential to create regular free cash flow. His concept focuses on buying exceptional firms at acceptable costs rather than inferior enterprises at low rates. This strategy has proven successful across numerous market cycles, with Berkshire Hathaway providing compound yearly returns significantly higher than market averages over several decades.

The “Oracle of Omaha” concentrates on companies he understands, avoiding complex technologies or models with uncertain earnings potential. He looks for companies with pricing power, great brand awareness, and the ability to preserve or grow market share even during economic downturns. Buffett’s conservative yet effective approach has helped him become one of history’s most successful investors.

Following the filing of Berkshire’s 13F on February 14, we now know that 60% ($180 billion) of Buffett’s $299 billion portfolio is concentrated in just four magnificent stocks.

Japanese stock investors are attentively watching Buffett’s letter in the hopes of gaining information that may affect the country’s trading houses. Buffett has previously approved Japanese trading companies, resulting in increased stock value. Market participants will examine his comments for clues about the future of these companies, particularly as they are impacted by decreasing energy prices and pressure from the US government to reduce oil expenses.

As usual, Buffett’s shareholder letter is expected to provide significant insights not only into Berkshire Hathaway’s performance but also into market trends.

Methodology

For this article, we scanned Warren Buffett’s Q4 2024 portfolio. We then chose 12 stocks with the highest 5-year average revenue growth (YoY) and ranked accordingly.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Amazon.com, Inc. (NASDAQ:AMZN)

5-year average revenue growth (YoY): 19.70%

Warren Buffett’s Growth Stock Portfolio includes Amazon.com, Inc. (NASDAQ:AMZN), which dominates the markets it serves, particularly in the areas of cloud computing and e-commerce. It has many advantages over its competitors and has become the undisputed leader in e-commerce because of its size and scope, which provide customers with an unparalleled assortment of affordable products. The company is still gaining market share in spite of its size, showing the ongoing secular trend toward e-commerce. In addition to providing a consistent flow of high-margin recurring revenue from consumers who make more frequent purchases from the firm’s properties, Prime unifies Amazon’s e-commerce initiatives. Customers receive unique video content, one-day shipping on millions of items, and other benefits in exchange, creating a strong positive feedback loop where buyers and sellers are drawn to each other. The ecosystem is further strengthened by the Kindle and other gadgets, which help draw in new clients while attracting current ones with their value offer.

Operating cash flow for the trailing twelve months of fiscal year 2024 was $115.9 billion, a 36% increase from $84.9 billion for the same period last year, which ended in December. Amazon.com, Inc. (NASDAQ:AMZN) declared in February that it will spend more than $100 billion on capital expenditures (CapEx) this year, with a major emphasis on advances in artificial intelligence (AI). This choice was made despite the rise of DeepSeek, a Chinese AI startup known for generating extremely efficient and cost-effective AI models that have sparked the IT industry. Amazon devotes a significant amount of its capital expenditures to AI development through AWS, or Amazon Web Services, which necessitates initial investments in hardware and data centers to support the platform’s rapid expansion.

Fred Alger Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“Amazon.com, Inc. (NASDAQ:AMZN) is a renowned online retailer and leader in cloud computing. The company’s Amazon Web Services (AWS) division offers utility-scale cloud solutions that support corporate America’s digital transition. During the quarter, Amazon’s shares contributed to performance as the company reported better-than-expected fiscal third-quarter results, with revenues and earnings beating analyst estimates. Operating margins expanded to 11%, driven by efficiency gains in logistics and robust AWS performance. Notably, AWS revenue growth accelerated during the quarter, along with recording its highest-ever operating margin of 38.1%, driven by easing cloud cost optimizations, renewed workload migrations, and an increasing contribution from AI workloads. On their earnings call, management highlighted plans to increase capital expenditures to enhance their technology infrastructure, catering to the surging demand for AI-driven computing.”

Overall, AMZN ranks 2nd on our list of Warren Buffett’s top growth stock picks. While we acknowledge the potential for AMZN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.