Legendary investor Warren Buffett’s track record can stand up to anyone’s. The Oracle of Omaha is one of the best value investors in the world, using a simple investing philosophy of choosing well-established companies that are leaders in their field and have strong management, earnings, and a sustainable dividend.
Buffett’s portfolio at his conglomerate, Berkshire Hathaway, often outperforms the S&P 500. In fact, Berkshire’s portfolio advanced an incredible 5,502,284% from 1965 to the end of 2024, while the S&P 500 gained only 39,054%, including dividends.
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It’s no wonder why so many people follow Buffett’s philosophy and Berkshire’s moves each quarter. However, not every stock in Berkshire’s portfolio is a slam-dunk winner right now. If I’m starting a portfolio right now, there are two Buffett stocks that are must-haves, and one that I would avoid.
Buffett stock to buy: BYD
Buffett usually shuns tech stocks, so Chinese electric vehicle (EV) company BYD (BYDDY 0.78%) is an odd choice for Berkshire. And truth be told, Buffett didn’t make this selection himself — Berkshire got involved with BYD on the advice of Charlie Munger, the late Berkshire Hathaway vice chairman and Buffett’s investing partner.
In China, BYD is the biggest EV maker, manufacturing vehicles like the Seal, Tang, Seagull, Dolphin, and Han. For the first six months of the year, sales of its battery and hybrid passenger EVs totaled 2.11 million, up 31.5% from a year ago. BYD also makes commercial vehicles, such as electric buses, trucks, and delivery vans. Those sales were 2.14 million in the first half of the year, up 33% on a year-over-year basis.
Those sales figures are pushing BYD’s revenue through the roof. For the first quarter, BYD reported revenue of 170.3 billion renminbi ($23.7 billion), up 36% from a year ago. Profits of RMB$3.75 billion were up 117% from a year ago, and earnings per share of RMB$3.12 were up 99% from last year.
I would take a very educated guess that Buffett is pleased with Berkshire’s BYD stake.
Buffett stock to buy: Amazon
A few years ago, I thought Alibaba Group was a far superior e-commerce stock than Amazon (AMZN 1.39%). I thought Alibaba had more potential to grow its e-commerce offerings than Amazon, which was already deeply entrenched with U.S. retailers.
Today, I like Amazon more. And it has nothing to do with its e-commerce division. Instead, I am a big fan of Amazon Web Services (AWS), the massive profit driver that is giving Amazon a dominant position in the fast-growing cloud computing sector.
AWS provided $11.5 billion in profits in the first quarter of 2025, with a solid profit margin of 39.4% — much better than the 6.3% margin for Amazon’s North America e-commerce sales, or its paltry 3% profit margin for international sales.
AWS is a big driver thanks in part to the rise of artificial intelligence (AI), which has changed how businesses and individuals function. Today, AI is used to compose text, photos, graphics, and videos and help people order food, process information, manage supply chains, and perform critical functions in the military and in healthcare. Creating massive data centers to run generative AI and machine learning platforms is cost-prohibitive for most companies, however, so Amazon’s AWS allows companies to manage and improve their AI functions on Amazon’s servers.
Amazon is investing heavily — $83 billion last year and an estimated $100 billion this year — in capital expenditures to expand its data centers to handle the increased workload, but that’s also going to mean massive profits in the years to come. Amazon currently has the top position in the cloud computing space, owning roughly 30% of the market share (Microsoft Azure is in second place with 21%, and Alphabet‘s Google Cloud has 12%).
Buffett stock to avoid: Apple
For years, Apple (AAPL 0.55%) has been Berkshire’s biggest holding. At one point, the smartphone maker comprised more than 40% of the Berkshire Hathaway portfolio as its revolutionary phones, wearable tech, tablets, and computers revolutionized the tech industry. Apple even had a two-decade run as the most valuable company in the world.
But Apple’s shine is starting to fade. Its iPhone is still popular, but the newest models aren’t must-have purchases for smartphone owners because they lack the groundbreaking innovation that Apple became known for. And unless the newest iPhone has a knock-your-socks-off new feature, people aren’t inclined pay $1,000 to upgrade when their current phone still works just fine.
Apple’s revenue and profits have flatlined over the last three years and Apple is no longer seen as the massively impressive growth stock that it used to be. Even Buffett trimmed his stake in Apple last year, selling about 100 million shares to reduce Berkshire’s stake to 300 million shares. Apple still makes up nearly 22% of the Berkshire portfolio, but it’s clearly a stock on the wane.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, and Microsoft. The Motley Fool recommends Alibaba Group and BYD Company and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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