“One word may explain Warren Buffett’s investment decisions on Apple and Amazon: profit,” Tae Kim reports for CNBC. “Last week Buffett both lamented on not investing Amazon shares and revealed how he added massively to Berkshire Hathaway’s stake in Apple.”
“The Oracle of Omaha’s moves may be explained by his philosophy of emphasizing a company’s historical financial track record versus putting credence in aggressive future forecasts from analysts,” Kim reports. “‘I think it’s fair to say, we’ve never looked at a [analyst] projection in connection with either a security we’ve bought or a business we’ve bought,’ Buffett said during a Berkshire Hathaway annual shareholder meeting in 1995, according to remarks found using CNBC’s Warren Buffett Archive.”
Apple “generated a $48.35 billion in profit during its fiscal 2017 and made $13.8 billion in net income during the March 2018 quarter,” Kim reports. “In comparison, Amazon’s total net income since inception is about $9.6 billion.”
Read more in the full article here.
MacDailyNews Note: Apple’s P/E ratio is 18.19. Amazon’s is 201.78.
[Thanks to MacDailyNews Reader “James M. Gross” for the heads up.]
To be fair, Amazon could have made more, if that were their goal, but since their shareholders were willing and patient, ie sheeple, they were able to reinvest alot of what would normally have been called profit. Now, that’s not to say Amazon is worthy of being valued where it is, cause it isn’t, but comparing its profit to Apple’s isn’t really telling the whole story.
Apple reinvested too..
I don’t believe there any way Amazon could generate tons of cash even if that was their only consideration. They are a model with a drive to the bottom on prices, unlike Apple.
KenC, you apparently do not understand the word profit. The comparison is apt.
KenC I was thinking the exact same thing. This headline is almost clickbait. Amazon hadn’t turned profitable for a very long time (by design). They were all about growth.
Apple is spending 30+ billion a year in research and dev… same thing amazon spends it on only apple is still profitable (extremely). i highly doubt amazon is spending that much or ever has but feel free to fact check me if i am wrong
Amazon isn’t spending much, if they are the return very small.
Just a heads-up. Apple could do the same. They also reinvest money that could be profit. I was surprised when I saw this the article. I’m an AAPL shareholder since 1998.
surreal
adjective
– a backdrop of surreal images: unreal, bizarre, unusual, weird, strange, freakish, unearthly, uncanny, dreamlike, phantasmagorical, AMZN.
So Apple would be a 10 Trillion dollar company if it were valued as AMZN.
Nope.. Apple is undervalued ..
Amazon is way over valued … its investors are happy…. its has been an amazing stock if one had the brass for its PE
The terms “overvalued” and “undervalued” are from the point of an individual investor/analyst. Current ‘value’ is what the market thinks of it by the amount the stock is priced and is never ‘over’ or ‘under’ it is what it is at present.
Investors looking to buy may think a stock is ‘overvalued’ due to wanting to purchase lower price. Investors looking to sell may see the same stock as ‘undervalued’ due to wanting to sell at a higher price. All perspective.
Undevalued and overvalued realtive to index and sectore averages.
PE indicates relitve valuation.
So let me correct myself:
Amazon is valued a lot more than Apple is.
As Warren Buffet stated that AMZN is miracle, but WB is not investing in miracle.
Warren Buffett is a value investor and not a miracle investor. What puzzles me is why analysts are always telling people to sell their Apple stock to buy Amazon or any of the FANG stocks. Apple is at least giving dividends right now and that’s more important to me than having to pay $1600 a share now for a stock that might be worth $2100 six months from now. Amazon is just too expensive for me to afford. Although Apple will NEVER be valued as high as Amazon, Apple has done me quite well though the years and I’m satisfied with that much.
But why does Apple stay “undervalued?” There must be something wrong the company is doing for it to be that way. Do investors have such little confidence in Tim Cook? I think it’s because Apple never attempts to gain major market share percentage. In other words, Wall Street doesn’t see Apple as being greedy enough to warrant a higher P/E.
It’s so weird how even Microsoft is valued far higher than Apple is. Fundamentally, it really doesn’t add up as far as I can tell.
Because Bezos is a great salesman. Simple as that.
Own both.
Long term, my hunch is that Amazon does better.
Apple is a one trick pony.
The investment in Amazon stock is based on what’s coming and the empire they’re building. Amazon is on the path to take over several industries. If just a portion of their plan comes about their current stock price is cheap compared to what it will be.
Apple is building on Job’s work but what’s their vision/plan moving forward? Where’s Apple’s projected explosion in growth or has it already happened? Why should investors push Apple’s PE up higher when Apple is so secretive? We don’t know what’s next or even if there IS anything next. What has Apple done lately besides allowing their quality to slip and abandoning products?
I love Apple products but the quality doesn’t come close to where it was 10 years ago. The tech is better but they no longer “just work”.
interesting viewpoint Gregg.
Amazon is a growing behemoth trying to take over several categories however the issue with them is as they disrupt there is going to be pushback from the people’s products they sell. Unlike apple they really dont make anything which is profitable (echo, firestick, etc etc) all have little to no margin to expand platform. what happens when there is an issue witht hat platform (security, product shortages or product blackouts from mfg’s etc) we don’t know and to me that is the big if with amazon.
As for apple i am wondering what doesn’t “just work” i own almost every product they make and in some cases multiple. They all work and all my info transfers seamlessly from one product to another. I change phones and the setup takes less than 5 minutes. homepod takes less than 30 seconds to setup and start using. when my phone rings my watch rings. when i am in a room and i say “hey siri” the algorithm automatically selects the best device to process my request.
What products have they abandoned? Ipod- ok outdated tech redundant with their current line of offerings. Maybe it is the router business where they were never a significant player and were not doing enough rev to justify the r&d spend. Don’t say they abandoned the mac pro, or macbook air as there are products clearly in the works and the air have been replaced with the base macbook at the same price.
As far as quality- Please tell me another company in the world who has service centers in every single store which can fix or swap products on the spot. Another company out there swapping screens with oem parts? How about swapping accessories like cases and cables for a year no questions asked? The answer is no one. Their products as referenced in a previous article last longer and are updated more frequently than any major mfg on the market.
i only write this because it is easy to lambaste apple for issues here in there but it is equally easy to prove those naysayers wrong with statistics and basic facts. There is no one in the world in any industry doing this better than apple the the $$$ proves it.
Amazon is a low margin retail outfit, they make nothing and that is there weakness.
Once you go low there is no coming back price wise, that is why Bezos is a great salesman.
Shareholder in both.
Amazon is steadily investing in new stuff and Apple is pissing away money on Beats, TV shows nobody watches, paying bonuses to Clueless Eddie Cue & the equally clueless Burberry Chick, ignoring the Mac and any number of other accessories.
This site used to poke fun at Amazon as they started to make products, but I guess it is not so funny anymore.
Nobody uses Apple Books- they buy Kindle Books. The Apple TV is sucking hind tit to Roku. Amazon has original TV content and Apple has made Planet of the Apps. Apple is still sucking hind tit on streaming music. The Mac app store is as dead as Princess Di, they have abandoned Airport and monitors and all kind of other things.
Apple is so fucking cheap they do not ship the power cord extension on your overpriced laptop anymore- the one with the jacked up keyboard that cannot be repaired, only replaced. That cord will the about a Jackson, thank you.
But they do have a nice HQ building and Jony is giving lectures and …
Amazon steadily investing in stuff… this is a fact… but they are no turning any profit on the “stuff” they are investing in. the profit they are generating from this stuff is less than what apple makes off beats which you beguile into mediocrity.
No one uses apple music? must have missed the 400m in rev a quarter on that one… not to mention 25% yoy growth in base.
Apple tv sucking rear tit? i agree here unless with tvos 12 we get a live channel guide pulling from all the apps then they are immediately in lead for use-ability far ahead of anyone else and their own leaks indicate a push for this moving forward.
What would you need a power cord extension for it comes with a 6ft cord. I also type on a MBP keyboard every single day for 1.5 years with no issues. I am sure the issues exist but don’t be fooled by what the media pushes into your face ….of the 15m+ sold we are talking about maybe a thousand with a defect.
there HQ is beautiful built on the back of unbelievable products which in every iteration are a notch or more above what the competition brings to the market. Yes i know there are better spec’d computers in the market… but not as a totality of a product line. none come with the support and security of apple and apple takes that to the bank every single quarter!
Correction: 40million paid users for apple music= 400million a month 1.2 billion a quarter. my bad.