At the end of this year, Warren Buffett will be stepping down as Berkshire Hathaway's CEO. Buffett has built an incredible track record of success since taking over the business in 1965 and using it as the foundation for an investment conglomerate that would go on to become one of the world's largest and most successful companies.
Buffett mostly made his name and delivered fantastic returns for shareholders through the principles of value investing, but Berkshire has also come to have a larger exposure to technology trends and growth stocks in recent years. And in the tech space, no trend is bigger or more important than artificial intelligence (AI) right now. With that in mind, read on for a look at two stocks that account for roughly 22% of Berkshire Hathaway's $282 billion stock portfolio.
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1. Apple
Keith Noonan (Apple): With a market capitalization of $3 trillion, Apple(NASDAQ: AAPL) stands as the world's third-largest company, trailing only Microsoft and Nvidia. Coming in at 21.6% of Berkshire's total stock portfolio, it's also the investment conglomerate's single largest publicly traded company. It retains that distinction even though Buffett's company sold more than 600 million shares of Apple stock last year.
In general, Berkshire Hathaway has been reducing its stock holdings and building up its cash position recently. The move likely reflects concerns that the market at large has become expensive relative to the level of macroeconomic and geopolitical risks that Berkshire's analysts see on the horizon. On the other hand, the move to significantly reduce its Apple holdings likely reflects some specific concerns facing the business.
While Apple's leading position in mobile hardware gives it a strong foundation to build out its artificial intelligence (AI) business, the company also seems to be behind leading players including Microsoft, Alphabet, and Meta Platforms in some key respects. For example, Apple has reportedly had significant trouble getting its next-gen, AI-powered Siri platform up to the performance levels that developers were targeting.
Additionally, Apple is facing some significant challenges in the Chinese market. The rollout of the company's Apple Intelligence platform was delayed last year because Apple had not found a Chinese company to partner with to roll out the software locally. As a result, sales for the iPhone 16 were relatively soft in the market. The mobile hardware giant has now partnered with Alibaba Group Holding to make its AI software available, but Chinese customers are still showing increased preference for domestic technology brands -- and geopolitical dynamics could create continued headwinds.
Berkshire's move to reduce its position in Apple has meant that Buffett's company has also actually reduced its investment exposure to the overall AI trend. On the other hand, Apple has still retained its status as Berkshire's largest stock holding -- and it seems clear that Buffett remains a big fan of the business. Apple has yet to match the AI successes of some other top tech players, but the company's many strengths suggest it still has many opportunities to be a big winner in the space.
2. Amazon
Jennifer Saibil (Amazon):Amazon(NASDAQ: AMZN) makes up a small percentage of the Berkshire Hathaway portfolio, and Buffett didn't even buy it. He said that one of the portfolio's investing managers, Todd Combs or Ted Weschler, pushed the button on Amazon stock, because tech isn't really in his wheelhouse. However, he's also said that he made a mistake by not buying it earlier.
Amazon is so much more than AI, but generative AI is leading it forward today, representing its greatest growth opportunities. Amazon Web Services (AWS) is Amazon's cloud computing business, where much of the generative AI is taking place. It's the largest cloud services business in the world, with 30% of the market, according to Statista.
CEO Andy Jassy believes that very soon all apps will be built with a generative AI component, like databases and storage today. Most of that is going to be built on the cloud, and as the leader, Amazon will account for a vast amount of it. "Before this generation of AI, we thought AWS had the chance to ultimately be a multi-hundred-billion dollar revenue run rate business," Jassy said on a recent earnings call. "We now think it could be even larger."
To make that happen, Amazon offers the largest assortment of generative AI tools and services throughout the three layers of its program. The bottom layer is complete customization for its largest clients to build their own large language models (LLMs), the foundation of generative AI. The middle layer is semi-custom solutions through the Amazon Bedrock program, and Amazon offers several tools in the top layer for small businesses that need ready-made programs. These are tools like the ability to create full product descriptions based on prompts.
AWS already pulls more than its own weight for Amazon. Sales increased 17% year over year in the first quarter, making it the second-fastest-growing segment behind advertising, and it accounted for 63% of operating income.
Will Berkshire Hathaway buy more Amazon stock after Buffett steps down as CEO at the end of the year? It will be interesting to see whether or not the equity positions change without Buffett in the top spot.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jennifer Saibil has positions in Apple. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Alibaba Group 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.
