Over time, Warren Buffett, the CEO of Berkshire Hathaway (BRK.A 2.24%) (BRK.B 1.97%), has been openly honest about his struggle to comprehend complex technology.
In fact, he deliberately avoided investing in technology stocks for a long time, expressing a preference for “straightforward businesses” and stating that he and his team would struggle to grasp highly technical concepts.
Despite his reservations, Buffett has actually accumulated significant wealth in recent years by investing in stocks that are expected to benefit from the progress of artificial intelligence (AI).
Apple
It’s not surprising that Berkshire’s significant investment in artificial intelligence (AI) is primarily focused on Apple.
When considering both Berkshire’s own shares and those held by its subsidiary New England Asset Management, Warren Buffett’s stake in Apple amounts to an astonishing 915 million shares, valued at around $164 billion.
Apple has a history of incorporating AI technology, starting with the integration of Siri into its iPhone in 2011, which marked the first inclusion of a voice-command digital assistant on a smartphone.
Since then, Apple has expanded AI-driven features on the iPhone, utilizing the Apple Neural Engine.
This on-device AI processor supports facial identification for unlocking the device, enhances Siri’s natural language processing capabilities, and facilitates Apple’s innovative computational photography features.
Moreover, Apple’s AI technology also powers various health and safety functionalities, such as electrocardiogram functionality, as well as fall and crash detection.
However, Apple has been relatively silent about generative AI, the technology that powers ChatGPT.
During a recent earnings call, CEO Tim Cook acknowledged the intriguing potential of generative AI but emphasized the importance of a deliberate and thoughtful approach when discussing future product roadmaps.
Numerous reports indicate that Apple is actively seeking to hire experts in generative AI, suggesting that there is likely more happening behind the scenes, given the company’s penchant for secrecy.
It’s safe to assume that we haven’t heard the last of Apple’s endeavors in the realm of generative AI.
Amazon
Berkshire Hathaway holds a significant position in Amazon, a trailblazer in e-commerce and cloud services, although Warren Buffett himself was not directly involved in the decision to invest.
The company’s stake in Amazon currently amounts to over 10 million shares, valued at more than $1.2 billion.
Buffett has expressed admiration for Amazon’s founder, Jeff Bezos, stating that he has held that admiration for a considerable period of time. However, he did not anticipate the remarkable level of success Bezos would achieve.
Amazon has been utilizing AI technology for various purposes, such as providing personalized product recommendations to users, forecasting inventory demand, optimizing its vast fulfillment and logistics operations, and accelerating delivery processes.
Additionally, the company offers AI and machine learning capabilities through Amazon Web Services, its cloud computing division.
Notably, Amazon was the first to introduce a range of products integrated with an AI-driven virtual assistant, popularizing the name Alexa.
Recently, CEO Andy Jassy disclosed that Amazon is making significant investments in large language models, the foundational technology behind generative AI.
Snowflake
Snowflake a specialist in data warehousing and analytics, is one of the top three AI holdings for Berkshire Hathaway.
The purchase of over 6 million shares, valued at more than $1 billion, was initiated by Todd Combs, a trusted associate of Warren Buffett and CEO of Geico, which is owned by Berkshire Hathaway.
Combs had previously utilized Snowflake’s data warehouse in conjunction with the company’s insurance operations.
Snowflake emphasizes that its platform was purpose-built to support machine learning and AI-driven data science applications.
The company enables businesses to leverage AI for improved decision-making, enhanced productivity, and expanded customer reach. Additionally, Snowflake’s platform facilitates the aggregation of data from various sources, enabling more valuable and insightful analysis.
Regarding investment decisions, Buffett has been unequivocal in his positive opinion of Apple. In fact, during Berkshire’s shareholder meeting in 2023, he described Apple as a superior business compared to any other in their portfolio.
Amazon, too, remains a formidable contender. The company dominates the e-commerce industry, commanding approximately 38% of the U.S. market share, surpassing the combined presence of its 14 closest competitors.
It also leads the cloud computing sector, with a market share nearly equal to that of Microsoft Azure and Alphabet’s Google Cloud combined. Additionally, Amazon has emerged as the world’s third-largest digital advertiser, trailing only Google and Meta Platforms.
Now could be an opportune time to invest in Amazon, considering its anticipated stock price rebound.
Lastly, we have Snowflake. While I personally support the company and own its stock, it carries higher risks and volatility compared to Apple and Amazon.
Although there is continued demand for Snowflake’s data storage and analytics services, its growth rate has slowed. Nonetheless, the recent decline in its stock price has made its previously inflated valuation more reasonable.
For those willing to embrace a slightly higher level of risk for the potential of greater returns, exploring Snowflake as an investment opportunity may still be worthwhile.
Rashmi completed her Graduation in economics and international relations.
Along with this, she is also completing a diploma course in human psychology to understand the nature of society and to analysis the facts related to this more systematically.
Apart from her studies, she is a voracious reader and writer too.