The Midas King of investments, Warren Buffett, turns everything it touches into gold. Cowen Group and Morgan Stanley analysts are well aware of this, seeing a significant upside for investors who own some of the stocks that are part of Buffett’s portfolio.
At the end of the second quarter Warren Buffett held over $ 327 billion in equity through Berkshire Hathaway and more than half of this amount was invested in just three companies: Apple, Bank of America e Coca-Cola, all of which were big winners for Buffett. However, some Wall Street analysts see strong upside for some of Berkshire’s smaller holdings.
Cowen Group’s John Blackledge has a target price of $ 215 per share on Amazon which implies an increase of 91% compared to the current price. Likewise, Morgan Stanley’s Keith Weiss has a target of $ 274 per share on Snowflake which implies an increase of 80% compared to the current price. Of course, investors should never take Wall Street’s target prices at face value.
High inflation has certainly hit many retailers hard over the past year, and Amazon is no exception. Rising fuel and labor costs, coupled with continued investment in infrastructure, weighed heavily on its financial performance. In fact, Amazon posted a loss for two consecutive quarters. But its difficulties are the result of temporary macroeconomic headwinds, not a failed investment thesis. Amazon’s future is still very bright.
According to eMarketer, global retail ecommerce sales are expected to grow 10% annually to reach $ 7.4 trillion by 2025, and Amazon is the world‘s most popular online marketplace in terms of monthly visitors. All of this should keep Amazon at the forefront of the ecommerce industry for years to come.
Additionally, cloud computing spending is expected to grow more than 15% annually to exceed $ 1.5 trillion by 2030, according to Grand View Research, and Amazon Web Services (AWS) has led the cloud infrastructure space with a 34% market share in the second quarter. Finally, according to eMarketer, global digital ad spend is expected to increase 10% annually to reach $ 876 billion by 2026, and Amazon has quietly become an advertising powerhouse. In fact, it is the fourth largest digital advertiser in the world, after Alphabet, Meta Platforms and Alibaba. This success comes mainly from the popularity of its online market, but its streaming platform (Amazon Fire TV) has also played an important role. Either way, investors have good reason to believe that Amazon will maintain its strong market position, which means the company is well positioned to gain ground in digital advertising.
Shares are currently trading at 2.4 times turnover, a bargain compared to the three-year average of 3.8 times turnover. Investors should take this opportunity and buy some shares of this Warren Buffet stock.
The Oracle of Ohama’s portfolio also includes Snowflake which helps companies harness the power of big data. In detail, Snowflake Data Cloud allows customers to share data within their organizations and includes developer tools that make it easy to build data-intensive applications. This broad utility gives Snowflake an edge over other vendors.
Over the past year, Snowflake has increased the number of customers by 36% to 6,808, and the average customer has increased their spending by 71% over that period. In turn, revenue rose 92% to $ 1.6 billion and the company generated positive free cash flow of $ 293 million, compared with a loss of $ 43 million a year earlier. Looking ahead, Snowflake estimates a $ 248 billion market opportunity by 2026, and given its solid financial results, investors have good reason to be optimistic.