Buffett's AI Bet by Proxy: Apple and Amazon Make Up 40.2% of Berkshire's $362 Billion Portfolio

Warren Buffett has never been the investor who rushes toward the newest thing, yet by the numbers in a Motley Fool analysis published in May 2024, two of the companies most tied to artificial intelligence make up 40.2% of Berkshire Hathaway's $362 billion portfolio of publicly traded stocks and securities. Apple accounts for 39.7% of that. Amazon accounts for the other 0.5%.

The record behind Berkshire is long. Buffett was born in 1930 and bought his first stock at 11. By 1965 he was running Berkshire Hathaway, and he still leads it. The analysis puts Berkshire's total return over 58 years at 4,384,748%, enough to turn $1,000 into more than $43.8 million. The same sum in the S&P 500 would be worth $312,230. The approach is simple to state: own companies with steady growth, sound profitability and strong management, and favor those that return cash through dividends and buybacks. Buffett has not chased the internet, cloud computing or AI as trends.

Apple is the heavyweight. Berkshire first bought it in 2016 and has spent about $38 billion building the position. The stake is now worth $143.5 billion, even after Berkshire recently sold 13% of it. Buffett attributed the sale to taxes, speculating that corporate rates could rise, and told investors Apple would likely still be Berkshire's largest holding at the end of 2024.

Apple fits his checklist closely. It grows revenue in most years, is highly profitable, pays a regular dividend, and has just announced a $110 billion buyback, the largest in corporate history. Buffett regularly praises CEO Tim Cook. Its services business, including Apple Music, Apple News, Apple TV and iCloud, is subscription-based and carries higher margins than its hardware.

The AI angle is quieter than at some rivals. The iPhone 15 Pro carries an Apple-designed A17 Pro chip that improves handling of AI workloads such as Siri and keyboard autocorrect. In March, rumors surfaced that Apple was in partnership talks with chatbot developers including Alphabet and OpenAI. The article speculates that Apple could charge such companies billions to be installed on its 2.2 billion active devices, noting that Alphabet already pays Apple around $18 billion a year to be the default search engine in Safari. More may come at the Worldwide Developers Conference in June.

Amazon is the opposite case. Berkshire did not buy it until 2019, and Buffett has often said he regrets not seeing the opportunity sooner. Amazon is now valued at $1.9 trillion, the world's fifth-largest company, and took in $574 billion in revenue last year, more than any other trillion-dollar tech peer. But it has historically posted consistent losses, with profits only in the last three quarters, and it pays no dividend and runs no buyback. That may explain the 0.5% weighting.

CEO Andy Jassy is pursuing three layers of AI: infrastructure, large language models and customer-facing applications. Amazon Web Services, the largest cloud provider by revenue, offers Nvidia GPUs but also its own chips, and Jassy says demand for the newest, Trainium 2, is strong on price and performance. Its Bedrock platform hosts ready-made models, including Amazon's own Titan family and those from Anthropic, in which Amazon recently invested $4 billion. For the third layer, Amazon launched Q, an assistant that analyzes a business's internal data and can write, test and debug code.

Two things to watch: what Apple reveals about its AI partnerships in June, and whether Amazon's AI push eventually earns it a larger place in Berkshire's portfolio.