Warren Buffett Loves This 1 Artificial Intelligence (AI) Stock

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Warren Buffett Loves This 1 Artificial Intelligence (AI) Stock

Warren Buffett owns nearly $2 billion of a well-known AI stock.

But most investors fail to realize the company’s long-term potential.

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actually gets most of its profits from its cloud business.

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Warren Buffett isn’t known for his tech investing — even less so,

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. But right now, Buffett’s holding company has bet nearly $2 billion on a business that sits at the center of the AI revolution. Most investors don’t realize this well-known company is an AI giant, making the stock a solid long-term bet for those looking to follow one of Buffett’s biggest positions right now.

Most people think of

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(NASDAQ: AMZN) as an e-commerce business. And that’s certainly true. Nearly 40% of all e-commerce sales in the U.S. are facilitated through

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. And most of

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’s revenue still is generated from digital retail sales.

But when you look at

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, the story shifts dramatically. Most of

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’s operating profits are generated by its

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Web Services division, more commonly referred to simply as AWS. So while AWS contributes less than 20% of total sales, it’s the primary contributor of

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’s profitability.

In recent quarters, AWS has grown its share of

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’s revenue pie while also demonstrating higher profitability levels. This should come as no surprise, given the massive rise in spending for AI infrastructure. Nearly every AI application requires cloud infrastructure to train and deploy the models necessary to function.

Building out independent infrastructure for every application isn’t cost effective. With cloud infrastructure, developers can scale storage and compute demand dynamically, based on their needs and the needs of their customers. The result is a more flexible, capable, and cost-effective back end.

When it comes to cloud computing, scale matters. The ******* a cloud network is, the better it can serve customers through additional data routing options and server capabilities. But cost and access are also key factors. The ******* the scale, the more a cloud provider can scale its fixed costs, passing these savings on to customers.

With greater scale also comes greater buying power. Nvidia’s next-gen Blackwell chips — coveted by nearly every AI developer — sold out for 12 months last year.

With a leading 30% global market share — nearly as big as the next two competitors combined —

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’s scale gives it durable competitive advantages across the board, especially when it comes to cost, reach, and sourcing high-demand, low-supply chips. Worldwide spending on AI is expected to reach $632 billion by 2028, growing at a rate of 29% annually. Next decade, many forecasts believe the market size will be several trillion dollars.

Story Continues

Already the market leader with sustained profitability, expect AWS to eclipse the e-commerce segment’s importance over the next five years.

Image source: Getty Images.

Nvidia has taken the AI market by storm with its next-gen GPUs. Right now, roughly 80% to 90% of data center GPUs use Nvidia’s products. Because the AI industry heavily relies on data centers, Nvidia has become a go-to stock for AI investors. But with such a dominant data center market share, might

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be the market’s next favorite AI stock?

While the e-commerce division offers huge value, I’m guessing it is the promise of AWS that drew Buffett and his team to the stock. The growth potential is clear, with

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in the driver’s seat. This growth opportunity should be one of the biggest in company history, able to be sustained for years, if not decades.

Currently,

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has a competitive advantage due to scale, while Nvidia’s position is mostly due to technological superiority and software lock-in. As previous chip wars have proven, however, competition will rise for Nvidia over time.

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’s position, meanwhile, may actually strengthen over time due to compounding scale advantages. That will be doubly true if it can provide mass availability of next-gen GPUs before the competition does.

Already commanding a market capitalization of $2.2 trillion,

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won’t generate magnificent returns. But growth in AWS makes the stock a long-term buy, with the potential to overtake Nvidia in the years to come.

Before you buy stock in

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, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 

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for investors to buy now… and

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wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when 

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 made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $657,385!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $842,015!*

Now, it’s worth noting Stock Advisor’s total average return is 987% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of June 2, 2025

John Mackey, former CEO of Whole Foods Market, an

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subsidiary, is a member of The Motley Fool’s board of directors.

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has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends

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and Nvidia. The Motley Fool has a

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.

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was originally published by The Motley Fool

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#Warren #Buffett #Loves #Artificial #Intelligence #Stock

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