Warren Buffett Said He 'Blew It' By Not Investing Early In Amazon — But Would It Have Fetched Better Returns Than Apple?

Did you know that in 1994, when Amazon Inc. AMZN was still a fledgling company, Berkshire Hathaway Inc. BRK BRK CEO Warren Buffett decided not to invest in what he thought was just an online bookstore. 

He disregarded Amazon again a few years later in 1997, when it went public.  

As of the last close, Amazon's market capitalization stands at $1.475 trillion.

“I had no idea it had this potential. I blew it,” Buffett reportedly said about Amazon in the past.

In the first quarter of 2019, Buffett's Berkshire began buying shares of Amazon, but Buffett at the time said he wasn't behind the purchases. "One of the fellows in the office that manage money … bought some Amazon so it will show up in the 13F," he told CNBC. 

See Also: A Complete Guide to FAANG Stocks 

In May 2019, when the company released its 13F form, it was revealed that Berkshire bought 483,300 shares of Amazon, worth about $860 million. 

At the end of the second quarter of 2023, Berkshire owned around 10.55 million shares of Amazon, worth roughly $1.37 billion. 

iPhone maker Apple Inc. AAPL is currently the leading equity portfolio investment of Berkshire Hathaway. In its latest 10-Q filing, Buffett's company said nearly 78% of its aggregated fair value was concentrated in five companies, including Apple, American Express, and Bank of America. 

Of the $318.62 billion equity investment in terms of fair value in these five companies, Apple constituted nearly half, or about $156.8 billion. 

Berkshire first invested in Apple in 2016 and purchased about 9.8 million shares worth $1.07 billion, at an average price of $109. 

But, what if, instead of buying Apple shares at that time, Buffett had decided to invest in Amazon? 

If Berkshire had decided to invest $1.07 billion in Amazon stock in 2016, it would have had about 36.05 million Amazon shares (based on the split-adjusted closing price of $29.68 on March 31, 2016). 

This would be worth a whopping $5.1 billion currently.

Apple implemented a 4:1 stock split in August 2020. This means that for every Apple stock a shareholder has, they would have four shares after the split. 

So, the 9.8 million shares would have become 39.2 million, worth $7.03 billion currently. 

Apart from the capital appreciation, Apple shares would have fetched dividend income for investors. Amazon, meanwhile, does not pay a dividend.

Notably, the current market capitalization of Apple, at the closing time of Tuesday, is $2.828 trillion. 

While Buffett has changed his opinions about Jeff Bezos's company since 1994, reasoning that the "miracle" of Amazon's growth deterred him from investing, it can be concluded that the “Oracle of Omaha” made the right decision to bet on Apple as Berkshire’s leading equity investment.

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