Renowned value investor Bill Miller has established a formidable reputation over his decades-long career. During his tenure managing the Legg Mason Capital Management Value Trust fund, Miller achieved a remarkable feat by outperforming the benchmark S&P 500 index for 15 consecutive years between 1991 and 2005.
Today, Miller is a billionaire and continues his investment journey through the firm he founded, Miller Value Funds. Due to his impressive track record, market observers closely monitor his investment decisions. In a recent quarterly update from Patient Capital Management—where Miller is a minority owner and advisor—he shared his perspective on two of the most prominent names in the stock market today: Amazon and Tesla. Miller categorically views Amazon as a buy and Tesla as a sell.
Miller’s rationale for dismissing Tesla lies in its current valuation, which he believes is excessively inflated. Despite acknowledging Tesla’s innovation and success, he does not see it as an attractive investment at current prices. “They’re going to have to knock the cover off the ball in terms of self-driving cars and AI,” Miller stated, emphasizing the high expectations embedded in Tesla’s valuation.
Although Miller described Tesla as an “incredible company” and praised its CEO, Elon Musk, calling him a “genius,” he stressed that his investment philosophy is rooted in valuation. From a value investing standpoint, Tesla does not measure up. His concerns are not unfounded. So far in 2024, Tesla’s performance has been lackluster. The company reported just 337,000 deliveries in the first quarter—the lowest quarterly figure in more than two years. Additionally, the company’s dominance in the electric vehicle (EV) space is now being seriously challenged.
A major competitor, China’s BYD, has made significant inroads. In China, BYD controls over 30% of the market share, thanks to its ability to deliver affordable models and superior charging technology. Miller pointed out a stark difference in value: “Tesla’s charging $8,000 for their self-driving system, and BYD has a self-driving system in a $9,000 car. BYD’s cars, I think they’re just better.”
Tesla’s valuation appears to rest heavily on anticipated breakthroughs, particularly in autonomous driving. The company plans a Robotaxi demonstration in June, showcasing its unsupervised full self-driving (FSD) technology. Yet skepticism remains about the system’s readiness and the timeline Musk has proposed for its rollout. Even if the demonstration is successful, the competition is not standing still. Startups like Pony AI and Slate Auto, which is backed by Amazon founder Jeff Bezos, are also pushing into autonomous vehicle technology.
Given these dynamics, Miller’s skepticism is understandable. He believes Tesla’s market value is built too much on future ambitions, while overlooking current operational challenges in its EV business. I share this assessment, as it seems the market is pricing in a level of success for Tesla’s futuristic projects without fully accounting for mounting competition and recent performance issues.
In contrast, Miller maintains his bullish stance on Amazon, a company he has backed for many years. In fact, he once remarked that he was “the largest personal owner of Amazon whose last name isn’t Bezos.” His continued confidence in the tech and retail behemoth is driven by a combination of strong leadership, operational prowess, and strategic diversification.
One of Miller’s core reasons for favoring Amazon is his confidence in CEO Andy Jassy’s leadership. He is also optimistic about the company’s various divisions, including Amazon Web Services (AWS), logistics operations, and its newer ventures like satellite internet. Miller also dismissed investor concerns about Amazon’s dependence on Chinese imports.
Tensions between the U.S. and China have led to reciprocal tariffs, sparking fears about the impact on companies with supply chains tied to China. Analysts from Wedbush Securities have previously suggested that as much as 70% of goods sold through Amazon originate in China. However, Miller considers these fears overblown. Given Amazon’s unmatched scale and logistical efficiency, he believes the company is well-positioned to navigate these challenges.
Jassy has acknowledged the impact of rising tariffs but expressed confidence in Amazon’s ability to adapt. He noted that many third-party sellers might pass on the additional costs to consumers. Furthermore, the platform’s diversity of sellers gives Amazon a buffer—some sellers may absorb the costs in order to boost market share. This competitive internal dynamic provides Amazon with flexibility during turbulent trade scenarios.
“Amazon has revenue diversity from the likes of AWS and advertising streams that have been performing well,” Miller emphasized. The company is not solely dependent on product sales, which helps cushion the impact of any external shocks to its retail business. Assuming trade relations between the U.S. and China stabilize in the future, Miller considers Amazon’s current valuation attractive. The stock trades at about 30 times forward earnings, which is near its five-year low.
Even in a scenario where tariffs persist longer than expected, Miller expects Amazon to weather the storm. There could be some short-term pressure on earnings, but the company’s long-term trajectory remains strong. He views the present situation as an opportunity for investors to take advantage of a fundamentally solid company trading at a discount.
This perspective from Miller may resonate with investors who feel they have missed out on top-performing stocks in the past. For those with similar concerns, analysts are promoting what they call a “Double Down” opportunity—highlighting companies they believe are poised for major growth despite having already shown significant returns.
To underscore the power of such moments, they point to past examples. For instance, a $1,000 investment in Nvidia during a “Double Down” recommendation in 2009 would be worth $302,503 today. Likewise, the same amount invested in Apple during a 2008 alert would now be $37,640. And Netflix? A $1,000 investment during a 2004 recommendation would have grown to an astonishing $614,911.
Currently, the Stock Advisor service is offering similar alerts on three companies that it believes present such rare, potentially lucrative opportunities. These insights are available to subscribers and are being pitched as a time-sensitive opportunity unlikely to present itself again soon.
In summary, Bill Miller’s latest investment opinions highlight the strength of his valuation-based approach. While recognizing the innovation and potential of companies like Tesla, he maintains that valuation is critical and believes Tesla is priced too high based on uncertain future success. Meanwhile, his long-standing faith in Amazon reflects confidence in its leadership, diversified revenue streams, and strategic advantages, especially during volatile geopolitical times. Investors would do well to consider both the risks of overpaying for future growth and the rewards of backing companies with solid fundamentals trading at reasonable prices.
