Ark Invest CEO Cathie Wood and Berkshire Hathaway CEO Warren Buffett are two investors often featured in financial media. But the fundamental reasons for the intense scrutiny of Mr. Wood and Mr. Buffett could not be more different.
Mr. Wood is an investor in growth stocks and often touts the potential of emerging technologies and even speculative opportunities that have not yet reached significant scale. In contrast, Buffett focuses on specific fundamentals such as cash flow, earning power, and steady growth over the long term.
However, despite these differences, Wood and Buffett share some overlap in their respective portfolios. In other words, both investors hold positions in Amazon. (NASDAQ:AMZN). Below, we outline why now looks like a lucrative opportunity to scoop up Amazon stock as 2025 approaches.
With 2025 just around the corner, investors are making the usual move to rebalance their portfolios. In other words, they lock in profits on stocks that have risen in value and reallocate those profits to opportunities that promise further profits.
In my eyes, Amazon is one of the best-positioned artificial intelligence (AI) stocks heading into next year. The company is primarily known for its e-commerce marketplace and cloud computing platform, but also boasts a budding subscription business (Amazon Prime), a streaming service (Prime Video), and an advertising business.
To me, all of Amazon’s major revenue streams are poised for significant growth during the fourth quarter. Over the past few months, businesses have been fine-tuning their financial forecasts and budgets for the coming year, while consumers are rushing to finalize their holiday shopping.
When Amazon releases its fourth quarter earnings in early 2025, it will see notable growth in Amazon Web Services (AWS) revenue and growth in e-commerce and subscriptions as the company doubles down on its AI roadmap. I wouldn’t be surprised if you saw it. Year-end shopping patterns provided a tailwind.
Beyond its diverse ecosystem and multiple revenue streams, what makes Amazon so attractive is its profitability.
Over the past year, Amazon has significantly accelerated its free cash flow generation. As a result, the company strengthened its balance sheet with $87 billion in cash and equivalents and was able to reinvest excess profits into opportunities in high-growth areas such as AI and streaming.
Two near-term catalysts that seem to have been overlooked include a new streaming series featuring YouTube’s biggest star (MrBeast) and continued focus on Anthropic, the AI unicorn that is becoming a key pillar and bellwether for AWS. Includes investments.
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