Arguably no money manager commands the attention of investors on Wall Street quite like Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) billionaire CEO Warren Buffett. Since the aptly named "Oracle of Omaha" became CEO in the mid-1960s, he's overseen a jaw-dropping aggregate return in his company's Class A shares (BRK.A) that surpassed 6,400,000%, as of the closing bell on March 25.
Buffett's investment philosophy has always emphasized value stocks, strong management teams, and a long-term focus. More often than not, Berkshire's chief and his top advisors, Todd Combs and Ted Weschler, are investing in recurringly profitable, time-tested, dividend-paying businesses.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
But what you might not know about the Oracle of Omaha is that he's also, subtly, investing in the artificial intelligence (AI) revolution.
With AI, software and systems are empowered to reason and act without human intervention, and they can evolve without persistent human oversight. According to a report from the analysts at PwC (Sizing the Prize), the AI revolution has the potential to increase global gross domestic product by $15.7 trillion come 2030.
While Buffett is anything but tech-savvy, there are three ways his company is positioned to take advantage of the rise of AI.
1. Nearly a quarter of Berkshire's $289 billion portfolio is invested in AI stocks
The first way Warren Buffett is subtly taking part in the AI revolution is through Berkshire Hathaway's investments in tech colossus Apple(NASDAQ: AAPL) and e-commerce behemoth Amazon(NASDAQ: AMZN). Collectively, the $67.1 billion currently held in shares of Apple and the $2.06 billion in Amazon stock accounts for roughly 24% of Berkshire's $289 billion of invested assets.
The reason these are "subtle" investments in AI is because Warren Buffett didn't buy them for their artificial intelligence ties. Rather, Buffett has a keen understanding of consumer buying habits, and there are few companies better at drawing in consumers and keeping them loyal their respective brands than Apple and Amazon.
Since introducing 5G-capable iPhones during the latter-half of 2020, Apple has maintained a 50% or greater share of the domestic smartphone market. Meanwhile, Amazon's Prime subscription service incents customer loyalty via shipping discounts and access to Prime Video, which has earned a couple of unique sports-streaming deals.
But make no mistake about it, Apple's and Amazon's long-term growth prospects are dependent on AI.
Last year, Apple introduced the world to its AI operating model, Apple Intelligence. The incorporation of AI into its physical devices, which should aid users with everything from text summarization to emoji creation, is expected to reignite excitement in its iPhone, iPad, and Mac.
As for Amazon, it's the parent of the world's leading cloud infrastructure service platform, Amazon Web Services (AWS). AWS brought in a third of global cloud service infrastructure spend during the fourth quarter, and is Amazon's highest-margin and fastest-growing segment. AWS is giving subscribers access to generative AI solutions, as well as allowing them to build/train large language models within its platform.
2. Warren Buffett's "secret" $586 million portfolio invests in select AI companies
The Oracle of Omaha is also subtly partaking in the rise of artificial intelligence via his "secret" portfolio.
In 1998, Berkshire Hathaway acquired General Re in a $22 billion all-stock deal (yes, all-stock deal) to get its hands on the company's prized reinsurance operations. However, General Re also owned a specialty investment firm known as New England Asset Management (NEAM). When the buyout of General Re was completed in December 1998, Buffett's company became NEAM's new owner.
Institutional investors with at least $100 million in assets under management are required to file Form 13F with the Securities and Exchange Commission no later than 45 calendar days following the end to each quarter. Since NEAM closed out 2024 with $586 million in invested assets, 13Fs allow investors to track the buying and selling activity of this secret portfolio of Warren Buffett's.
Take note that while the Oracle of Omaha closely monitors Berkshire Hathaway's $289 billion investment portfolio, he doesn't oversee NEAM's investment activity. Nevertheless, what NEAM owns is, ultimately, part of Berkshire Hathaway.
As of Dec. 31, Buffett's secret portfolio held stakes in 121 securities. Some of these are businesses that are heavily invested in an AI-driven future, such as NXP Semiconductors, Alphabet, Microsoft, and Broadcom(NASDAQ: AVGO), to name a few.
For instance, Broadcom has become the preferred choice among businesses for AI-networking solutions. The company's Jericho3-AI fabric is capable of connecting up to 32,000 graphics processing units at once, with the goal of maximizing their computational capacity, as well as minimizing tail latency. Reducing lag is critical to AI systems making optimal split-second decisions.
3. Berkshire Hathaway Energy is ideally positioned for the evolution of artificial intelligence
The third subtle way Warren Buffett is participating in the $15.7 trillion AI revolution is through subsidiary Berkshire Hathaway Energy (BHE).
Buffett has overseen the purchase of roughly five dozen businesses in his six decades as CEO, some of which have originated from the energy sector and become part of fully owned subsidiary BHE. This includes rate-regulated utility MidAmerican Energy Company and PacifiCorp, to name a few.
Image source: Getty Images.
BHE is positioned to benefit from the evolution of AI in a variety of ways. For starters, artificial intelligence is a highly energy-intensive technology. The electricity needs of AI-data centers should lead to an increase in consumption and a modest lift in revenue and profits over time for this key Berkshire subsidiary.
In addition to an increase in energy demand vis-à-vis AI-data centers, BHE should be able to capitalize through investments in battery storage and smart grid technology. Buffett's subsidiary is deploying its capital to build out a cleaner energy network (e.g., solar and wind) that'll ultimately reduce long-term energy generation costs and result in more optimal energy management through the use of digital meters.
Lastly, BHE has been utilizing AI and machine learning (ML) technology to improve its energy production. Back in October 2020, long before artificial intelligence was the hottest thing since sliced bread, BHE Renewable and MidAmerican Energy renewed their respective contracts with AI-driven software-as-a-service provider Uptake Technologies -- Uptake was acquired by IBM in 2023 -- to optimize the maintenance of its wind fleets. Uptake's AI and ML reliance has led to as much as a 2% increase in wind-generated electricity production for wind-focused utilities.
Warren Buffett may not know the ins-and-outs of how an iPhone works, but he is, indeed, invested in the stock market's hottest trend, artificial intelligence.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. American Express is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Sean Williams has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, International Business Machines, and Microsoft. The Motley Fool recommends Broadcom and NXP Semiconductors and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
