Berkshire's Amazon Exit: A Story of Inherited Convictions

Berkshire Hathaway sold its entire Amazon stake in two stages between October and March. The initial sale of 77% of the position was led by Warren Buffett in his final quarter as CEO, while the remaining shares were cleared out by Greg Abel in Q1 2026. At first glance, it seems Berkshire lost faith in Amazon's business.

However, a closer look reveals that the real reason for the sale is more nuanced. Todd Combs, who had managed the Amazon position, left Berkshire to lead JPMorgan's Strategic Investment Group in January 2026. As a result, Abel decided to unwind the position, following a common institutional practice where remaining principals do not want to inherit convictions they did not build.

The valuation of Amazon also played a role in Abel's decision. With a forward PE ratio of around 27x, Amazon looked expensive compared to Berkshire's usual discipline on price. Moreover, Amazon's recent capex spending has put pressure on its free cash flow, which could have been a concern for Abel.

Contrary to Berkshire's sale, David Tepper's Appaloosa Fund nearly doubled its Amazon stake in the same period, betting that the market was wrongly punishing Amazon for AI infrastructure spending. Tepper's view was vindicated by Amazon's Q2 2026 results, which showed a 37% year-over-year growth in AWS and a $25 billion annualized run rate in the AI and chips businesses.