Warren Buffett is widely considered the greatest investor. From 1965 through 2023, his conglomerate, Berkshire Hathaway, delivered an astounding 4,384,748% total return to shareholders, or nearly 20% on an annualized basis.
If you have some extra cash to invest right now, Berkshire's stock portfolio is a great place to look for inspiration. Here are two Berkshire-held stocks to buy today that have above-average return prospects over the next five years.
1. Amazon
Amazon (AMZN -0.32%) stock has delivered incredible gains to shareholders over the last 20 years as it locked in a commanding lead in the online retail market. But over the next 20 years, most of Amazon's returns will likely be generated by its cloud computing business, where it's currently investing heavily to meet growing demand for artificial intelligence (AI).
Amazon Web Services (AWS) controls more than 30% of a growing $297 billion cloud computing infrastructure market, according to Synergy Research. AWS has been expanding its AI capabilities by offering tools like Amazon Bedrock, which helps companies build AI agents. The company even developed its own custom processors to help reduce the cost of using AI for its cloud services clients. It's for these reasons and others that AWS' revenue growth accelerated last year, growing 19% year-over-year in the third quarter.
AWS provides only 17% of Amazon's total revenue, but it accounts for an outsized share of its profits. AWS generated $10.4 billion of operating income in Q3, comprising the majority of Amazon's $17.4 billion total operating income.
One of the most impactful ways Amazon can profit from AI is by increasing its use of robotics to complete tasks in fulfillment centers. This is expected to significantly lower costs and enhance margins.
Analysts expect the company to deliver 22% annualized earnings growth over the next several years. Regardless of how the stock performs in 2025, Amazon's business will continue to grow and reward long-term investors for years to come.
2. American Express
American Express (AXP 1.12%) has been a constant holding in Berkshire's portfolio for more than 30 years. Along with Coca-Cola, it's one of Buffett's longest-held positions, and the credit card brand's recent growth shows it still has promising prospects as an investment.
The stock returned about 69% over the last three years. In Q3, American Express reported record revenue, and its full-year revenue is expected to be up by 9%. The company also raised its 2024 earnings guidance range to between $13.75 and $14.05, which would be an increase of 24% at the midpoint.
American Express acquired 3.3 million new customers in Q3, which is consistent with recent quarters. New card members fuel a profitable cycle of growth for the company, as many of them eventually upgrade to premium products like Gold or Platinum cards, for which it charges higher annual fees.
For example, the Gold card carries a $325 annual membership fee; that steps up to $695 per year for the Platinum card. These fees provide consistent revenue streams for the company. In return, American Express offers special merchant discounts and other benefits to members.
American Express clearly has a desirable brand -- an attribute that Buffett places a high value on. While credit card companies that are more dependent on consumer discretionary spending could see weaker results in a recession, American Express should continue to benefit from a growing economy over the long term.
Management believes they can grow earnings at a mid-teens percentage rate over the long term. Against those expectations, the shares currently offer good value at 19.5 times 2025 earnings estimates. American Express is a great business that will continue to grow in value over many years.
