Buffett’s Berkshire Hathaway owns shares of Amazon and Visa.
Amazon’s AI work should help boost its revenue and profits in the next decade.
Visa will continue riding the cash displacement phenomenon through 2035.
10 stocks we like better than Amazon ›
Warren Buffett will step down from his role as the CEO of Berkshire Hathaway at the end of the year. Although his legendary decade-long tenure is coming to an end, investors can still learn a great deal by studying the man’s investing philosophy and examining the conglomerate’s famous portfolio, which contains many excellent buy-and-hold options.
Two of the top picks among Berkshire Hathaway’s 41 holdings are Amazon (NASDAQ: AMZN) and Visa (NYSE: V). These market leaders have the potential to deliver superior returns over the next decade.
Here is why.
Image source: The Motley Fool.
Amazon is a highly profitable company with U.S. and international operations in e-commerce, grocery shopping, video and music streaming, advertising, and cloud computing. However, outside of its cloud operations, the company’s business is relatively low-margin.
In the second quarter, Amazon’s North America and international segments had operating margins of 7.5% and 4.1%, respectively. Here’s the good news: In the next decade, e-commerce should continue expanding internationally, granting significant growth prospects to these parts of Amazon’s business.
In the meantime, the company will seek to improve its margins by implementing artificial intelligence (AI) initiatives across its operations. The company has deployed more than a million industrial robots in its warehouses to that end. Amazon’s North America and international segments generate hundreds of billions of dollars in annual revenue. Even modest margin improvements annually over the long run could have a meaningful impact on the company’s bottom line.
Then there is Amazon’s fast-growing cloud unit. It is responsible for most of the company’s operating and net income, thanks to its much juicier margins. With a suite of AI services whose…
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