While Buffett's pursuit of the latest stock market trends isn't obvious, Berkshire Hathaway's portfolio shows that many of the company's holdings benefit from artificial intelligence.
Buffett has led Berkshire Hathaway Holdings since 1965. He likes to invest in companies with stable growth, reliable profitability, strong management teams, and shareholder-friendly measures such as dividend payments and stock buyback plans.
This strategy is indeed working, with Berkshire's return rate reaching a staggering 4,384,748% from 1965 to 2023. That's equivalent to a compound annual return of 19.8%, nearly double the S&P 500's 10.2% annual return over the same period.
In U.S. dollars, a $1,000 investment in Berkshire Hathaway stock in 1965 would have grown to more than $43 million, while the same investment in the S&P 500 would have been worth just $312,333 with dividends reinvested. Dollar.
Buffett isn't an investor chasing the latest trends in the stock market, so you won't see him staking out hot artificial intelligence stocks today.
However, the three stocks Berkshire currently owns will benefit significantly from artificial intelligence and even account for more than 45% of Berkshire’s total portfolio of publicly traded securities, which totals $398.7 billion.
1. Snowflake: 0.2% of Berkshire Hathaway’s portfolio
Snowflake has developed a data cloud platform that can help enterprises bring their critical data together on one platform to analyze data more effectively and extract the maximum value from the data.
The service is designed for large, complex enterprises that work with multiple cloud providers, such as Microsoft Azure and Alphabet's Google Cloud, which often leads to the creation of data silos.
Last year, Snowflake launched the CortexAI platform, which allows companies to combine off-the-shelf large language models (LLMs) with their own data to create generative AI applications.
Cortex also comes with a full suite of AI tools, such as Document AI and Snowflake’s Copilot virtual assistant. The former allows businesses to extract valuable data from unstructured sources such as invoices or contracts, while the latter uses natural language prompts to provide valuable insights across the Snowflake platform.
Source: Foresight News
In the first quarter of fiscal 2025, which ended April 30, Snowflake's product revenue reached $789.6 million, up 34% year-over-year. On paper, this is a strong growth rate, but a slowdown from previous quarters.
While Snowflake continues to invest heavily in growth initiatives such as marketing and research and development, it is acquiring new customers at a slower pace and existing customers are even slower to expand their spending.
Berkshire Hathaway bought a stake in Snowflake during the data cloud major's 2020 IPO, so the price per share could be around $120.
The company's shares soared to a high of $392 in 2021, but have since fallen 63% from that level, currently trading at $142. Unfortunately, investors may want to avoid this Berkshire stock pick as the company's growth slows and the stock still appears to be quite expensive.
2. Amazon: 0.5% of Berkshire Hathaway’s investment portfolio
Berkshire bought shares of Amazon (AMZN1.22%) in 2019, and Buffett has repeatedly expressed regret for not identifying the opportunity earlier. When Amazon was founded, it was an e-commerce company. It later expanded its functions to include cloud computing, streaming media, and the digital advertising industry, and now it has expanded its functions to the artificial intelligence industry.
Its Amazon Web Services (AWS) cloud computing unit designs its own data center chips that can cost AI developers up to 50% less than other infrastructure using Nvidia chips.
Additionally, Amazon’s Bedrock platform provides developers with a library of ready-made LLMs from some of the industry’s leading startups, as well as a self-developed family of LLMs called Titan.
Source: Foresight News
Essentially, AWS wants to be the destination of choice for developers looking to create their own AI applications. Various Wall Street forecasts suggest that artificial intelligence will add $7 trillion to $200 trillion in revenue to the global economy over the next decade, potentially becoming Amazon's biggest opportunity ever.
Berkshire Hathaway's $2 billion stake in Amazon represents just 0.5% of the conglomerate's stock portfolio.
In the long term, artificial intelligence could fuel Amazon's massive growth. So if Buffett just wanted this position to be bigger before, he may kick himself for not adding to his holdings sooner as the new chapter in AI begins.
03. Apple: 44.5% of Berkshire Hathaway’s investment portfolio
Apple (AAPL 2.16%) is Berkshire Hathaway's largest holding by far. The conglomerate spent about $38 billion starting in 2016 to accumulate shares, with its holdings now worth $177.6 billion.
Apple makes the world's most popular electronic devices, including iPhone, iPad, Apple Watch, AirPods and Mac line of computers.
The company is getting into the artificial intelligence industry with its new Apple Intelligence software, which will be released with the iOS18 operating system in September.
Developed in partnership with OpenAI, the software will transform the user experience on Apple devices. The Siri voice assistant will use the functions of ChatGPT. Similarly, its writing tools such as notes, emails and iMessage will also use the functions of ChatGPT to help users quickly create content.
Source: Foresight News
There are more than 2.2 billion active Apple devices worldwide, meaning Apple could soon become the largest company distributing AI technology to consumers.
The upcoming iPhone 16 is expected to feature powerful new chips capable of handling AI workloads on the device, potentially triggering a significant upgrade cycle.
Apple meets all of Buffett's stock-picking criteria. Since Berkshire's initial investment in 2016, the company has grown steadily, continued to be profitable, has a committed leader in CEO Cook, and has returned substantial capital to shareholders through dividends and stock buybacks.
In fact, Apple just announced a new $110 billion buyback program, the largest in U.S. corporate history.
Disclaimer】The market is risky, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reprinted with permission from: Foresight News
Original author: Anthony Di Pizio
Compiled by: Heart of the Metaverse
