Cathie Wood, CEO of Ark Invest, and Berkshire Hathaway CEO Warren Buffett are two investors who are prominent in the financial media. However, the underlying reasons for the intense scrutiny of Wood and Buffett couldn’t be more different.
Wood invests in growth stocks and often touts the potential of emerging technologies or even speculative opportunities that have yet to reach critical scale. In contrast, Buffett focuses on concrete fundamentals such as cash flow, earnings power and steady growth over a longer term.
But despite these differences, Wood and Buffett share some overlap between their respective portfolios. Both investors have positions in it Amazon (NASDAQ: AMZN). Below, I’m going to outline why acquiring Amazon stock now looks like a lucrative opportunity as 2025 approaches.
With 2025 just around the corner, investors are going through the usual motions of rebalancing their portfolio: taking profits on stocks that are on the rise and reallocating those gains into opportunities that could be primed for further gains.
In my view, Amazon is one of the best-positioned artificial intelligence (AI) stocks for next year. While it’s best known for its e-commerce marketplace and cloud computing platform, the company also has a start-up subscription business (Amazon Prime), a streaming service (Prime Video), and an advertising business.
To me, those are all of Amazon’s main revenue streams ready for significant growth during the fourth quarter. In recent months, companies have adjusted their financial forecasts and budgets for next year as consumers rushed to complete their holiday shopping.
When Amazon reports fourth-quarter earnings sometime in early 2025, I wouldn’t be surprised to see notable increases in Amazon Web Services (AWS) revenue as companies double down on AI roadmaps, as well as an increase in e -commerce and subscription segments. fueled by year-end purchasing patterns.
What makes Amazon so attractive beyond its diverse ecosystem and multiple revenue streams is its profitability.
Over the past year, Amazon has significantly accelerated its free cash flow generation. As a result, the company has been able to strengthen its balance sheet – which boasts a cool $87 billion in cash and equivalents – and reinvest excess profits into opportunities in high-growth areas such as AI and streaming.
Two near-term catalysts that I think are being overlooked include a new streaming series with YouTube’s biggest star (MrBeast) and continued investment in AI unicorn Anthropicthat is becoming a crucial pillar and benchmark for AWS.