Amazon's stock has underperformed the broader market as investors show disappointment in its modest cloud revenue growth.
Amazon has been diligent about expanding its business beyond e-commerce and cloud.
Visa should experience organic growth as the world continues to embrace digital payments.
Few, if any, people or companies have their investing moves examined and studied as much as Warren Buffett and Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). Buffett is one of the most successful investors of all time, and Berkshire has averaged nearly 20% annual returns since Buffett took over in 1965 through the end of 2024, compared to the S&P 500's (SNPINDEX: ^GSPC) 10% average. So, I guess the attention is justified.
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Some investors directly copy Buffett and Berkshire's moves, but that's not always advised for the average investor. However, if you have $1,000 available to invest and want to add a couple of Buffett stocks to your portfolio, these two options are great choices. Investing $500 into each could (and should) pay off nicely down the road.
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Amazon (NASDAQ: AMZN) is a stock Buffett has admitted he was hesitant to embrace, but its historical results show he was smart to come around to his deputies' recommendation. Past performance aside, Amazon's stock has disappointed a bit so far this year. Through Aug. 19, the stock is only up around 4% year to date, underperforming the S&P 500 and tech-heavy Nasdaq Composite (NASDAQINDEX: ^IXIC) and Nasdaq-100.
AMZN data by YCharts
A lot of Amazon's stock price struggles this year has to do with "disappointing" results from its cloud business, Amazon Web Services (AWS). I used quotations because the results weren't terrible, in my opinion; investor expectations were just lofty, given the performance of other cloud platforms like Microsoft's Azure and Alphabet's Google Cloud.
In the second quarter, AWS's revenue increased 17% year over year, while Azure's and Google Cloud's increased 39% and 32% in their recent quarters, respectively. It's not ideal, but it's also not a cause to ring the alarm and jump ship. AWS is still the world's leading cloud platform, and a slowdown seemed inevitable at some point with its size.
Artificial intelligence (AI) momentum has put a spotlight on AWS, but Amazon's business extends far beyond that. It has become somewhat of a conglomerate, with its hands in everything from e-commerce to advertising to entertainment to healthcare.
Amazon's e-commerce business doesn't need an introduction, but I think its advertising and other subscription businesses are flying under the radar. They'll likely never be as profitable as AWS, but they can be productive pieces of Amazon's growing ecosystem. Amazon is a business that's built to be productive for a long time.
Buffett is a huge fan of businesses with economic moats, and Visa (NYSE: V) fits that description perfectly. It's the world's leading payment processor, accepted by more than 150 million merchants, has partnerships with around 14,500 financial institutions, and it processed over $16 trillion in payments in the trailing 12 months leading up to March 31.
Visa's economic moat is its vast reach. And it's not just the current reach -- it's the network effect the company benefits from. Both potential cardholders and merchants are incentivized to go with Visa because it's the most widely accepted and used card in the world, and there's no close second.
Visa continues to put up impressive financial results, even with consumer spending decreasing a bit. In its fiscal third quarter (ended March 31), Visa's revenue grew 14% year over year to $10.2 billion, and its net income grew 8% year over year to $5.3 billion. Both of these have skyrocketed over the past five years.
V Revenue (Quarterly) data by YCharts
It's hard to see a time when Visa isn't a key staple in the global financial world. The company has shown that it's not getting complacent with its leadership position by investing in emerging payment technology to ensure that it keeps up with digital payment developments.
Visa is embracing stablecoins -- which are tied to the dollar and make it easier to send money around the world -- and has been seeking ways to integrate AI into its network for smarter and more efficient transactions. As the world continues to embrace digital payments, Visa is one of the companies that stands to gain the most. That's a lucrative opportunity that investors should embrace.
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Stefon Walters has positions in Microsoft and Visa. The Motley Fool has positions in and recommends Alphabet, Amazon, Berkshire Hathaway, Microsoft, and Visa. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.