Did AMZN Stock Just Boost Jeff Bezos’ Net Worth Ahead of Warren Buffett’s?

Jeff-BezosIs Jeff Bezos Now Wealthier Than Warren Buffett?

Warren Buffett has been a perennial contender for the title of world’s richest person, but he just lost another spot in the rankings. As anyone searching “Jeff Bezos net worth” could tell you, a sudden burst in AMZN stock has put Amazon’s CEO ahead of Buffett.

It happened last Friday, as shares of Amazon.com, Inc. (NASDAQ:AMZN) and Berkshire Hathaway Inc. moved in opposite directions. AMZN stock continued the 20% climb it has been on for the last three months, taking Bezos’ net worth to $65.0 billion, while Buffett saw his wealth drop slightly.

By about midday, AMZN stock had made Bezos $300 million richer than Warren Buffett. It was a remarkable ascension for Bezos, whose company only started making consistent profits last year. He’s now the third-richest person in the world. (Source: “Jeff Bezos Briefly Unseats Warren Buffett For The First Time To Become World’s Third Richest Person,” Forbes, July 22, 2016.)

What This Means for Jeff Bezos’ Net Worth

The No. 1 and No. 2 spots are held, respectively, by Bill Gates and Amancio Ortega, both of whom are CEOs in their own right. Gates was the founder and CEO of Microsoft Corporation and Ortega built the Zara clothing empire. Ortega is worth an estimated $73.1 billion, while Gates is sitting on an even more impressive fortune of $78.0 billion.

What’s incredible is that Gates plans on giving away 99% of his wealth to philanthropic causes. Gates has signed the “Giving Pledge,” a philanthropic initiative designed for billionaires to donate most of their wealth. Buffett is also a Giving Pledge signatory, which is partly how Bezos was able to eclipse him. The “Oracle of Omaha” gave away $2.9 billion in July.

So even though AMZN stock had Bezos on track to pass Buffett, it probably wouldn’t have happened this early without Buffett’s philanthropic efforts. That being said, there’s a chance that Bezos could become the world’s richest person someday soon.

He is incredible at building wealth. Like Warren Buffett, Bezos has an uncanny knack at allocating capital. Every time Amazon starts to make money, he immediately plows its profits into a new business line. He then makes Amazon the dominant player in that business, making the business more money to plow into another new endeavor. It’s an endless cycle of growth that keeps fueling AMZN stock’s growth.

“Amazon Web Services” is a perfect example of this pattern. Bezos had founded his company as an e-commerce business. He wanted it to become the online retailer, an “Everything Store” where customers could buy cars, cushions, or cough syrup. The “Everything Store” laid a solid foundation for Amazon, but it wouldn’t have justified such enormous gains in AMZN stock. That growth happened because Amazon took its income and built a cloud computing business out of it—Amazon Web Services (AWS).

AWS was a brilliant move. The company had to construct giant data centers anyway, so why not lease out its excess space? That decision proved serendipitous for the company, especially since more and more companies started moving their workloads to the cloud.

Before long, AWS was Amazon’s cash cow. It’s a high-margin business with more than a trillion dollars still untapped and Amazon is the market leader! Simply put, AWS is the reason that Amazon generated profits in recent quarters.

The Bottom Line on Jeff Bezos’ Net Worth

Amazon is pushing its AWS profits into its video streaming service, which is drawing in more members to the Amazon “Prime” program.

And Jeff Bezos is the brilliant mind behind all of these innovations. It’s only natural, then, that he reap the rewards.

As the controlling shareholder of AMZN stock, Bezos’ wealth is tied to the success or failure of Amazon. If investors continue to reward the company’s growth, Bezos could see his net worth dwarf that of Buffett, Ortega, and even the great Bill Gates.