$135 Billion of Warren Buffett's $332 Billion Portfolio Is in This Top Artificial Intelligence (AI) Stock
No investor is more synonymous with long-term success than Warren Buffett. The legendary chief of Berkshire Hathaway is nicknamed the Oracle of Omaha for a reason: He's so good at making the right picks that it almost seems like he can see into the future. Today, he oversees a portfolio worth $332 billion.
He believes in picking great companies and sticking with them rather than scouring the market for great prices and actively trading. That's pretty much what I believe, too. As Buffett puts it: "When you find a truly wonderful business, stick with it. Patience pays."
One of his best long-term bets remains his top holding, Apple (NASDAQ: AAPL). Berkshire's stake in the iPhone maker amounts to $135 billion, making up about 41% of the holding company's entire portfolio.
Some might doubt Buffett's belief after he sold 100 million of Apple shares -- about 13% of Berkshire's total -- last quarter, but this was likely for tax reasons, as Buffett himself hinted, rather than a loss of faith.
So why does Buffett love Apple so much? Why does he believe it's "an even better business" than his longtime favorites, Coca-Cola and American Express? For one, it has made Berkshire quite a lot of money. Beyond this, it is the definition of a wonderful business that continues to gain value as it adapts to the times.
Slumping iPhone sales in China look to be reversing as India surprises
Global sales are important to Apple. Domestically, the needle is harder to move, with more than 90% penetration of the smartphone market. In China and India, on the other hand, it has penetration rates of 75% and 40%, respectively. This leaves much more room to grow organically without the need to convert an Android user.
That's why investors were spooked when Apple reported disappointing numbers in first-quarter China sales. However, preliminary data indicates that the situation is reversing. A report in April showed that sales of foreign-made smartphones rose 52% year over year. Most Android phones sold in China are made domestically, so "foreign-made" would be primarily referring to iPhones.
More recently, Bloomberg reported that Apple's India sales jumped 33% in the trailing 12 months from March. Much of the focus was on China sales, so investors were pleasantly surprised by the huge jump in a market Apple had struggled in previously.
Look for the sales numbers from China and India in Apple's upcoming second-quarter report. Continued success in these markets could mean a big boost in revenue, but keep in mind that Apple won much of this market share by reducing prices, I'm interested to see the effect that decision has had on the company's margins and net income.
If Apple Intelligence delivers, U.S. sales could see a big boost as well
Apple stood back while Alphabet and other big tech players rushed to incorporate artificial intelligence (AI) into their products. This worried many investors who believed Apple had simply fallen behind. Now the picture looks a little different.
Roughly a year and a half after ChatGPT-3 went public, Apple finally announced its own AI offering, the cheekily dubbed Apple Intelligence.
Apple built its reputation on quality, so the company waited until it believed its AI product would be intuitively integrated, genuinely useful, sleek, and free of errors -- something Google might want to consider in the future.
Apple Intelligence hasn't been released to the public yet, so perhaps I'll eat my words, but I have confidence it will deliver. If it does, this could drive renewed demand for Apple products, some from non-iPhone users, but more importantly from iPhone users who have been resisting an upgrade.
Apple Intelligence won't work on older products, and only the newest iPhones will be capable of using the most advanced features.
The company continues to evolve, often leading -- or at least perfecting -- new trends. That is probably why it remains Buffett's biggest bet. It's also why I think Apple is still a buy.
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American Express is an advertising partner of The Ascent, a Motley Fool company. Johnny Rice 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.
