Berkshire Hathaway (BRK.A -0.46%) (BRK.B -0.48%) stock has soared more than 2,664,000% since Warren Buffett assumed control of the company in 1965, a performance that has pushed the price of a single Class A share to roughly $500,000. If you had a $300 stake in the company prior to the Oracle of Omaha buying the business and held onto your shares, they would now be worth roughly $8 million.
Today, the investment conglomerate has a market capitalization of roughly $744 billion and ranks as the world's seventh-largest company. The explosive share price gains it's recorded in past decades are generally more difficult to deliver these days, but the company has been devoting more of its portfolio to growth-oriented stocks that are capable of moving the needle in a big way. If you are hoping to follow Buffett's lead, consider two tech stocks in the Berkshire Hathaway portfolio that have what it takes to deliver market-crushing returns.
Image source: The Motley Fool.
1. Amazon
If you used fractional-share purchasing to spend $300 on Amazon (AMZN -2.47%) stock right now, that would get you just over a tenth of a share, based on the company's current stock price of roughly $2,920. However, with the company on track to carry out a 20-for-1 stock split in June, that tenth of a share will likely become more than two whole shares in the near future. The move won't do anything to change the intrinsic value of the business, but it could help power a surge of new interest in the stock among retail investors.
Amazon's stock price climbed after the company announced plans to split its stock back in March, but it's now given up the post-announcement gains. The market has generally continued to become more cautious about stocks that trade at growth-dependent valuations, and the tech giant's share price has seen a pullback in conjunction with this trend. However, it would be a mistake to put Amazon in the speculative stock category.
The tech giant's revenue and net income have surged over the past decade, and that's paved the way for its strong stock performance across the stretch.
AMZN Revenue (TTM) data by YCharts
While the company is probably best known as a titan of the e-commerce industry, from an earnings perspective, the true jewel of the business is Amazon Web Services (AWS). The cloud infrastructure service leads its category and provides the backbone for a huge section of the internet, and it puts Amazon in a position to benefit from the ongoing evolution of the web and connected applications.
With an operating income margin of roughly 30%, AWS is a cash-printing machine. It gives Amazon the ability to make huge investments to expand its online retail business, explore a multitude of potentially revolutionary growth opportunities, and remain significantly profitable at the same time. This is a company that's built to win the future.
2. Snowflake
In the age of cloud services, more data is being created and analyzed than ever before, but there are substantial hurdles that must be overcome to get the most valuable insights. These days, most businesses use a combination of cloud services that rely on infrastructure provided by Amazon's AWS, Microsoft's Azure, and Alphabet's Google Cloud, but it's not easy to combine and analyze data from these walled-off providers. Snowflake (SNOW -1.29%) is helping its customers address this issue.
Snowflake's data warehousing service makes it possible to combine and analyze data from the major cloud providers, creating the potential for more accurate and valuable insights. The company also provides a marketplace where users can buy and sell access to data sets, paving the way for an even more encompassing analytics profile.
| FY20 | FY21 | FY22 | FY23 Guidance | |
|---|---|---|---|---|
| Product revenue growth (YOY) | 164% | 120% | 106% | 66% |
| Non-GAAP product gross profit | 62.8% | 68.7% | 74.1% | 74.5% |
| Non-GAAP operating income (loss) | (105%) | (38%) | (3%) | 1% |
| Non-GAAP adjusted free cash flow | (75%) | (12%) | 12% | 15% |
Note: The Fiscal year ends on Jan. 31. The Fiscal 2023 guidance figure is for the midpoint of guidance. FY = Fiscal year. YOY = Year over year. Data source: Snowflake.
Snowflake's revenue surged to reach $1.14 billion in fiscal 2022 (ended Jan. 31), and the company's guidance (at the midpoint) calls for sales growth of 66% in fiscal 2023. That admittedly points to some deceleration compared with fiscal 2022's performance, but it's still impressive growth, and the data specialist is actually opting to forgo some revenue in the near term in order to provide expanded services to customers at a lower cost. Management also expects the business's operating margin to move higher again this year, and its adjusted free cash flow margin is set for an even more substantial improvement, so the company's momentum still looks very strong.
On the heels of continued turbulence for growth stocks, Snowflake's share price is now down roughly 55.7% from the high it hit last year. The long-term demand outlook for the company's services remains very favorable, and investors could score big wins by taking advantage of the pullback.
