Warren Buffett has been the CEO of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) for decades. His track record in allocating capital for the company is astonishing, with a stellar compound annual growth rate of about 20%. In the past several years, though, one company, in particular, has produced a fantastic return that has lifted the Omaha conglomerate.
Berkshire Hathaway has a huge public equities portfolio. Given Buffett’s history of avoiding investments at the cutting edge of technology, it might be surprising to learn that he owns $67 billion of this artificial intelligence (AI)-related stock (as of April 1). While it has soared 617% in the past 10 years, it’s currently trading 14% below its peak.
Here’s what investors need to know.
Losing the AI race
In 2024, Berkshire ended the year with a $334 billion position in cash and Treasuries. Buffett’s top position, Apple (AAPL -7.28%), was trimmed significantly. Nonetheless, it still represents the largest holding in the portfolio.
Apple might be a larger AI player than many people realize. The company announced Apple Intelligence last June, and officially launched in October 2024. Newer versions of the iPhone, iPad, and Mac have AI-supported capabilities, such as writing and editing tools, generating photos, and creating special emojis. In typical Apple fashion, privacy and security are the cornerstones of this new tech push.
However, there are worries that Apple is falling behind in the AI race. Apple Intelligence was supposed to boost iPhone sales, the company’s most popular product. But iPhone revenue was down 1% year over year in the fiscal 2025 first quarter.
CEO Tim Cook mentioned on the latest earnings call that sales of the iPhone 16 suite were better in markets where Apple Intelligence was available. Regardless, it hasn’t pushed up demand like many observers expected.
Apple recently announced that the anticipated upgrade to Siri has been delayed. The hope was for the virtual assistant to provide a unique and personalized experience for users, relying on knowledge that it gains from various apps to craft insightful responses. Consumers may not see an update until 2026.
Both sides of the argument
The critics have a valid point. Apple was late, compared to tech peers, when it introduced Apple Intelligence last June. That was 19 months after OpenAI’s ChatGPT was released to the world in November 2022. Apple is a dominant enterprise with unlimited financial resources and some of the best talent around, so it makes you scratch your head when wondering why it took the company so long to get into this game.
The rollout has also been underwhelming. This forces many to question how badly the business was caught off guard by the AI boom.
I tend to have a more optimistic view. While I agree that the current available AI features aren’t game changers, publicly announcing the Siri update delay and taking a hit directly on the chin is the correct move. Apple is known for being incredibly user-friendly, with its devices and software working without hiccups. Introducing an error-prone and glitchy Siri would undermine its reputation.
Apple should be able to make good on its promise and launch an AI-powered Siri in 2026. It’s in an advantageous position with almost 2.4 billion active devices across the globe, and everyone will likely forget about the past blunders.
However, Apple is trading at a price-to-earnings ratio of 30. I don’t believe prospective investors should buy the stock right now, even though Buffett remains a large shareholder.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
