Both Warren Buffett and Cathie Wood have this AI stock in their portfolios

• Warren Buffett and Cathie Wood with different investment styles
• Both own Amazon shares
• Amazon wants to be heavily involved in the AI ​​business

Cathie Wood has sometimes been praised as “the new Buffett,” but her investment style is worlds apart from that of the Oracle of Omaha. While Warren Buffett and his investment holding Berkshire Hathaway prefer to focus on value stocks with a strong competitive advantage, ARK Invest, Cathie Wood’s investment company, focuses on growth stocks with disruptive potential. Due to this very contrasting investment style, there are predominantly different stocks in the portfolios of Berkshire Hathaway and the ARK Invest ETFs. But there is exactly one AI-related stock that both investors own equally.

This investment brings together Warren Buffett and Cathie Wood

While Cathie Wood believes strongly in the potential of artificial intelligence (AI) and therefore relies on some AI-related stocks in her ETFs, the Berkshire portfolio does not yet have a strong AI focus. Nevertheless, Buffett Holding owns shares in some companies that are likely to benefit from the AI ​​trend – but they were not brought into the portfolio for this reason. One of these companies is Amazon. Berkshire has been investing in the e-commerce giant since 2019 – and Cathie Wood also owns shares in the online shopping giant in one of her ETFs.

However, the decision to buy Amazon shares at Berkshire Hathaway was not made by Warren Buffett himself, but by one of the holding’s two investment managers. However, the investment legend fully supported the decision: “I’m a fan and I was an idiot for not buying,” Buffett told CNBC. In the third quarter of 2023, Berkshire Hathaway held 10 million Amazon shares, although at 0.4 percent they only made up a small share of the holding’s total portfolio.

Cathie Wood’s Amazon position is also rather small: her ARK Space Exploration & Innovation ETF (ARKX) contains 50,270 Amazon shares, which make up 3.12 percent of the ETF. Amazon is the twelfth largest position in this fund (as of January 23, 2024). However, Amazon shares are not included in other ARK ETFs, such as the ARK Innovation ETF.

There are further similarities between the two star investors: for both of them, the Amazon position is so small that it is unlikely to have a significant impact on the overall performance of the portfolio, and neither Buffett nor Wood are likely to own Amazon shares bought because of their AI potential. Berkshire Hathaway built up the position long before the AI ​​hype started, and the placement of Amazon shares in the ARK Space Exploration & Innovation ETF also suggests that Cathie Wood’s interest is actually in another of the company’s projects. As “The Motley Fool” writes, Amazon’s “Project Kuiper” in particular aroused the investor’s interest. This is intended to provide communities around the world with reliable and affordable broadband services via satellite. But of course Amazon, like all other large tech companies, is currently also intensively dealing with the trending topic of AI – and thus offers Buffett and Wood access to this complex of topics.

Amazon has great AI opportunities in these areas

In the future, Amazon’s business could benefit greatly from the hype surrounding artificial intelligence. Although the company has been relying on AI for several years with its algorithms for product recommendations and the virtual assistant Alexa, the big AI opportunities are only now likely to arise – in the cloud. Amazon, with its cloud business Amazon Web Services (AWS), is one of the largest cloud providers in the world – and wants to optimize its cloud services for AI. “Customers want them [KI-]Bringing models to their data, not the other way around. And a large part of the data lies with AWS as the clear market segment leader in the area of ​​cloud infrastructure,” said Amazon CEO Andy Jassy according to “The Motley Fool” as part of the figures for the third quarter of 2023. Jassy is also assuming that around 90 to 95 percent of global IT spending is still done on-premises and only the rest in the cloud. In his opinion, this ratio will reverse in the next 10 to 15 years – probably also due to the increasing integration of AI. Should If this happens, AWS should benefit massively.

But apart from the cloud business, Amazon also wants to be involved with the big players in the AI ​​sector. The online retailer invested billions of US dollars in OpenAI competitor Anthropic, expanded its partnership with the AI ​​company C3.ai and developed its own AI chip. Amazon CEO Andy Jassy wants to compete with top dog NVIDIA with this chip and was confident in an interview with “CNBC” that in the future “a large part of machine learning and training will be done with the help of AWS chips and computing power”.

If the hoped-for AI success at Amazon actually materializes, Warren Buffett and Cathie Wood should also benefit from it thanks to their investments in the US company – and possibly increase their previously small positions even further.

Editorial team finanzen.net

– On our own behalf –

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