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Amazon Rose More than 3% on Berkshire Bet

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May. 6 2019, Published 2:35 p.m. ET

Berkshire is buying Amazon stock

A CNBC report on Thursday said that Warren Buffett has revealed that Berkshire Hathaway (BRK.A) is purchasing stock in Amazon (AMZN), a company that Buffet has always admired. Amazon stock soared 3.24% to $1,962.46 on Friday.

Though Berkshire didn’t disclose the exact amount of stock purchased, Buffett expressed his regret for not buying it earlier. “Yeah, I’ve been a fan, and I’ve been an idiot for not buying,” Buffett said.

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Why Amazon?

Amazon has been one of the best-performing tech stocks this year and has gained 30.7% in the year-to-date period as of May 3. The online retail giant is currently the third most valuable company in the world with a market cap of $966.2 billion, behind Microsoft (MSFT) and Apple with a market cap of $987.7 billion and $974.3 billion, respectively.

Despite sluggish revenue growth of 16.9%, Amazon reported way better-than-expected earnings in Q1 2019 and posted higher profit margins thanks to lower revenue-generating businesses like cloud, advertising, and third-party seller services. Amazon has also fully integrated Whole Foods and is expanding in newer markets.

Amazon and Berkshire

Last year, Berkshire teamed up with Amazon and J.P. Morgan (JPM) to reduce the rising cost for insurers and employers. Amazon has been expanding into the healthcare space through acquisitions and partnerships. In June 2018, Amazon acquired PillPack, an online pharmacy startup that focuses on the delivery of prescription and over-the-counter medications. Amazon, through its voice-assistant offering Alexa has partnered with Merck (MRK) to help people manage diabetes.

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