Warren Buffett has repeatedly described his decision not to invest in Amazon during its 1997 initial public offering as one of the biggest mistakes of his investing career. Had Berkshire Hathaway invested $1 million in Amazon’s IPO and simply held the position, that stake would be worth approximately $3.28 billion today, illustrating the extraordinary long-term returns generated by one of the world’s most successful technology companies.
When Amazon went public in May 1997, the company was primarily an online bookstore with annual revenue of just $148 million and a market capitalization of roughly $438 million. Many investors questioned whether internet retailers could build sustainable businesses, while Buffett acknowledged that he struggled to estimate Amazon’s future competitive advantages using his traditional value investing framework.
For decades, Buffett has emphasized investing only in businesses he fully understands. During the early years of the internet boom, he largely avoided technology stocks because he believed their long-term economics were difficult to predict. That cautious approach helped Berkshire Hathaway avoid much of the damage caused by the dot-com crash in the early 2000s, but it also meant missing one of the greatest investment opportunities in stock market history.
Amazon ultimately transformed far beyond its original business model. Under Jeff Bezos’ leadership, the company expanded into e-commerce, cloud computing through Amazon Web Services, digital advertising, logistics, artificial intelligence, consumer electronics, and streaming entertainment. Today, Amazon is one of the world’s largest publicly traded companies and a cornerstone of many institutional investment portfolios.
Buffett has openly admitted that he underestimated Bezos’ ability to execute on such an ambitious vision. In several interviews, he has praised Amazon’s founder as an exceptional business leader and acknowledged that his own analysis failed to appreciate the scale of the opportunity. Rather than viewing the missed investment as a regret alone, Buffett has often used it to demonstrate that even the world’s most successful investors inevitably overlook outstanding opportunities.
Despite missing Amazon’s IPO, Berkshire Hathaway eventually gained exposure to the company by purchasing Amazon shares in 2019. Buffett later explained that the investment was initiated by one of Berkshire’s portfolio managers, although he publicly supported the decision and reiterated his admiration for Amazon’s business.
The story remains one of the most frequently cited examples of opportunity cost in investing. While avoiding technology protected Berkshire during the dot-com bubble, passing on Amazon also meant missing a company that went on to deliver returns measured in hundreds of thousands of percent over nearly three decades.
