Berkshire Hathaway’s portfolio holds at least three top tech stocks that benefit from AI.
All three of these magicians have excellent insights beyond their AI work.
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Warren Buffett, often considered the greatest investor of all time, has historically been cautious about investing in technology companies. However, whether it was his own doing or the influence of some of his lieutenant investors, Berkshire Hathawayhis (NYSE: BRK.A)(NYSE: BRK.B) the portfolio holds several tech stocks, or at least some tech-adjacent ones. Some of them are also outstanding players in the growing field of artificial intelligence (AI) and could provide excellent long-term returns as they capitalize on this massive opportunity. Three stocks in the conglomerate’s portfolio, in particular, Apple(NASDAQ:AAPL), Amazon(NASDAQ: AMZN)and Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL)appear to be excellent AI stocks to buy.
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Despite the fact that Berkshire Hathaway has sold Apple shares several times in recent years, the iPhone maker remains the conglomerate’s largest holding. And while Apple is perceived as lagging behind some of its similarly-sized tech peers in AI, the company is making slow but steady progress in this department. Apple has added even more AI features to its latest iPhone, the 17, which is seeing strong demand. Management believes AI features are part of the reason.
The iPhone 17 and the predecessor 16 face supply constraints, preventing Apple from meeting the high demand for these models. Over the next two years, the company should experience a strong renewal cycle that will help drive sales growth.
Meanwhile, Apple is significantly increasing its investments related to artificial intelligence. Apple is likely still in the early stages of its AI strategy and will leverage its large installed base to further strengthen its ecosystem by adding a host of AI features to its devices. And as it does, the company’s hardware business, particularly the iPhone, should continue to be a decent driver of growth. In addition, Apple’s services segment will continue to make progress.
This long-term, high-margin opportunity will help boost profits as Apple’s more than 1 billion subscriptions continue to grow. All of these factors make Apple’s prospects attractive and an excellent AI stock to buy and hold for a while.
Amazon has become a leading provider of AI services. Through market-leading Amazon Web Services (AWS), the tech giant offers products like SageMaker, a service that helps companies build and train machine learning models. Perhaps Amazon’s best-known AI offering is Bedrock, through which it provides access to a library of generative AI models, including some of the market leaders. Amazon also uses in-house artificial intelligence to increase efficiency and productivity.
The army of industrial robots in Amazon’s warehouses now uses AI assistance to optimize travel routes. This aligns with Amazon’s relentless focus on customer service as it helps expedite deliveries to customers even faster. These initiatives are expected to continue to have a positive impact on the company’s financial results.
Amazon’s cloud computing business is doing very well and has recently seen sales growth the likes of which it hasn’t seen in years. Meanwhile, Amazon’s bot efforts should help cut costs and boost margins in its e-commerce business. The best part is that these are long-term opportunities for the company, and it boasts a strong economic moat thanks to switching costs within its AWS division and strong network effects for its e-commerce business. All of these factors make it a top AI stock to buy and own.
Alphabet is a newcomer to Berkshire Hathaway’s portfolio, with the conglomerate initiating a position for the first time in the third quarter. The online search leader is also establishing itself as a leader in AI, although at first many believed the rise of chatbots would disrupt its search empire; however, it has adapted thanks to AI. Alphabet’s AI presentations and AI mode are getting strong success. Alphabet also offers access to a variety of AI services through the cloud, which helps that segment — already the company’s fastest growing — expand even faster.
Meanwhile, the company recently launched its newest AI model, the Gemini 3, which it says is its best yet. It’s clear that Alphabet is benefiting from AI and isn’t seeing its business decline because of it, as some have predicted. And more to come as the company continues to innovate. It adds to the long list of growth drivers it boasts, which also includes its YouTube streaming ambitions and a large and growing number of Google subscriptions. Berkshire Hathaway was right to initiate a position in this excellent AI stock.
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Prosper Junior Bakiny has positions in Alphabet, Amazon and Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
25% of Warren Buffett’s Portfolio Is Invested in These 3 Unstoppable AI Stocks was originally published by The Motley Fool
