In the first quarter of 2026, Greg Abel took over as CEO of Berkshire Hathaway. He executed a significant strategic shift. He completely liquidated the company's stake in Amazon stock. This involved selling all 2.3 million shares. Berkshire had owned these since 2019. The period coincided with the early stages of the pandemic. It also matched the growing importance of cloud computing for global businesses.
Although the Amazon position had accounted for less than 1% of Berkshire's overall stock portfolio for most of its tenure. Its sale marked a clear turning point in Abel’s leadership. This acquisition represented a strategic bet on a potential housing market rebound. The rebound was expected in the near future.
AWS's Strong Performance in 2026
Berkshire's decision to sell Amazon stock occurred amid a period of strong performance for Amazon, particularly in its cloud computing arm, Amazon Web Services. In the second quarter of 2026, AWS achieved a 37% increase in sales, contributing to a broader surge in the company's overall financial performance. Amazon’s total revenue rose by 20% year over year during this period, underscoring the strength of its core operations and services.
AWS, now led by Andy Jassy—who is currently Amazon’s CEO—has become a central player in the artificial intelligence revolution. Jassy has consistently emphasized the massive potential of cloud computing, despite the company's significant investments in AI infrastructure. He believes that companies must be prepared to meet the challenges of AI if they are to capitalize on the opportunities it presents.
These strategic investments in AI have already begun to yield tangible results. During the second quarter of 2026, AWS saw a 63% increase in operating income. This segment contributed to over 60% of Amazon’s total operating profit, highlighting AWS’s growing importance to the company’s financial health and future growth.
Jassy has set his sights even higher, envisioning AWS becoming a $1 trillion sales business in the future. This ambitious target is supported by AWS's AI development platforms and internal chip manufacturing, which operate with a run rate of $25 billion. These capabilities are essential for AWS to maintain its position as a market leader and to support long-term growth in the AI and cloud sectors.
The strong financial performance of AWS in the second quarter of 2026 has led to a noticeable shift in investor sentiment. Following the earnings report, Amazon's stock price rose by 26% and continued to climb in the weeks that followed. By the end of the quarter, it had gained 43%, suggesting that Abel's timing for selling the stock may have been less than optimal.
In response to the earnings report, a number of Wall Street analysts revised their price targets for Amazon stock, typically looking at a 12- to 18-month timeframe. These adjustments reflect growing confidence in AWS’s long-term potential, driven by the ongoing demand for cloud services and advancements in AI technologies. Analysts are increasingly viewing Amazon as a compelling long-term investment.
Berkshire's Strategic Shift and Amazon Exit
Despite the positive financial results and renewed investor optimism, Berkshire's decision to exit its Amazon position has raised some concerns. The company initially acquired Amazon stock in 2019, when one of its portfolio managers made the purchase, as Warren Buffett had admitted to overlooking the opportunity. He described Amazon's growth under Jeff Bezos as something close to a miracle. Now, with Abel's decision to sell, some market observers are wondering if this marks a repeat of that earlier strategic misstep.
Warren Buffett's perspective on Amazon has been a topic of discussion. This began with his initial comments about missing the opportunity to invest in the company during its early stages. He once remarked, 'I've watched Amazon from the start. I think what Jeff Bezos has done is something close to a miracle.' He added, 'The problem is, if I think something will be a miracle, I tend not to bet on it.' That statement could be sound investing advice. But it has also sparked debate. People question whether it is wise to overlook a company that is redefining industries. And whether it is wise to ignore one that is demonstrating remarkable growth.
Warren Buffett's Perspective and Strategy
While Buffett's strategy has historically focused on value investing. It has also focused on long-term stability. The evolving business landscape has introduced new challenges. The rapid rise of AI has redefined what constitutes a promising investment. So has the rapid rise of cloud computing. As Amazon's AWS business continues to grow at an impressive rate. It also continues to gain recognition from the market. Investors are beginning to question whether Berkshire’s decision to sell its Amazon stake was based on traditional investing principles. Or whether it was a failure to adapt to the new economic paradigm.
The market's reaction to Amazon's performance in 2026 has further fueled speculation about Berkshire’s decision. With Amazon's stock surging after the second-quarter earnings report and continuing to climb in the following weeks, the timing of Berkshire’s exit could appear to be less than ideal. This has led to growing debate about whether Abel's strategic choices align with the company's long-term goals or if the decision to sell was a result of underestimating Amazon’s potential, much like Buffett did in 2019.