Greg Abel Just Dumped Amazon Stock. Here Are 5 Reasons to Buy It.

Amazon (NASDAQ: AMZN) was a surprise stock pick when Berkshire Hathaway picked up shares in 2019. As a tech stock, it's not the classic Buffett stock, but the major consumer element and dominant position fit right in.

Warren Buffett attributed the purchase to one of the investing managers, but he also said he should have bought it earlier.

The stock gained 131% from the end of the third quarter of 2019, when it was purchased, through the end of the first quarter of 2026, when it was sold.

Image source: Amazon.

Is the sale a warning to the retail investor? Not necessarily. As a holding company with a $330 billion equity portfolio and 200 stand-alone businesses, Berkshire Hathaway's goals are likely to be a lot different than yours.

Many of the portfolio's stocks are not investor favorites, and it functions differently from an individual portfolio. One of its main businesses, for example, is insurance, since it uses the float to fund operations.

In fact, Amazon looks like an excellent buy today for investors who have a curated, retirement-focused portfolio. Here are five reasons why.

1. AI opportunities

With the explosion in artificial intelligence (AI), Amazon has harnessed a perhaps unprecedented opportunity. It was well positioned to expand into this area when generative AI exploded in 2022, since it's already a tech giant with years of experience in AI, data analysis, and machine learning from its e-commerce business.

Even better, it's the largest cloud company in the world, starting Amazon Web Services (AWS) in 2006. That has added a complete, stand-alone business where AI development takes place, under the direction of Andy Jassy, who's now the CEO of Amazon.

The AI business is growing at a dizzying pace. Amazon has released a large assortment of AI tools and features, such as the Kiro agentic AI development tool, which saw enterprise customer usage increase 10-fold in the first quarter. The Bedrock business, which enables clients to develop AI apps, is used by 80% of Fortune 100 companies.

Amazon also has a well-developed AI semiconductor business, and sales grew 40% quarter over quarter in the first quarter. As a stand-alone business, it would have a $50 billion run rate and be one of the largest chip companies of its kind. Its Trainium chips offer competitive cost savings compared with other chips, and they keep improving in price performance. Tranium4 is already in development, and all phases are already sold out.

Amazon also offers the Graviton line of central processing units (CPUs) that have been in high demand for agentic AI workloads, delivering high performance at a fraction of competitors' pricing.

2. Cloud growth

Although cloud growth is connected to the AI business, it's also its own, complete business. Even before the AI explosion, Jassy noted that 85% to 90% of company spend was still on-premises, not in the cloud, but that there would be a shift. Well, that shift is happening, and as the world's largest cloud services business, Amazon is benefiting.

AWS sales growth accelerated to 28% year over year in the first quarter, the highest growth in 15 quarters, and on a much larger base -- the last time growth was this high, the base was half of what it is now. To get a sense of what that means, it's $2 billion more than last quarter.

As companies recognize opportunities in AI, they're switching over faster. Some of the deals AWS made in the first quarter were with Bloomberg, the U.S. Army, Meta Platforms, Nvidia, and many more.

3. Momentum in e-commerce

Don't forget the company's original and core e-commerce business, which still accounts for the bulk of sales and enables the company to innovate in other areas. E-commerce is still growing at double-digit rates despite its massive size, and Amazon may be gaining market share as it improves its value proposition.

It now services 2,300 metro cities with three-hour delivery and hundreds of cities with one-hour delivery on 90,000 products, and it added 600 new brands in the first quarter. It's now the second-largest grocer in the U.S., and people who buy groceries spend more overall in their baskets, creating even more potential.

4. The satellite business

Amazon has been working on a broadband satellite business set to go live later this year, in competition with SpaceX's Starlink. Amazon Leo has already launched 10 satellites and has more than 250 low-Earth orbit satellites in orbit, and it's planning 20 more next year. It already has deals with Delta Airlines and Apple, and this is an exciting development to watch.

5. The attractive valuation

Amazon stock trades at a P/E ratio of 32, an attractive valuation for a company with this many opportunities.

If you're looking for a top stock with enormous potential at a great price, don't worry about what Greg Abel is doing and buy Amazon.

Jennifer Saibil has positions in Apple. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Meta Platforms, and Nvidia. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.