Despite being 94 years old and nearing the end of his tenure as CEO at Berkshire Hathaway, it’s misleading to categorize Warren Buffett as an outdated investor. After all, one doesn’t earn the title of the greatest investor ever by clinging to yesteryears.
Although Buffett consistently adheres to a fundamental set of investment guidelines that have proven successful for him, he doesn’t shy away from exploring fresh sectors if he spots a promising business offered at a reasonable value. When you examine Berkshire’s extensive $291 billion stock portfolio, you’ll find most industries represented – even the rapidly growing artificial intelligence (AI) sector. Intriguingly, as much as 39.1% of Berkshire’s portfolio is allocated to merely three AI-related stocks.
1. Apple: 21.9% of portfolio
In 2016, I found myself observing as Buffett and Berkshire Hathaway ventured into acquiring shares of the renowned tech giant, Apple (AAPL). At a certain point, Apple’s presence within Berkshire’s portfolio surpassed the 40% mark. Since then, we’ve seen a gradual reduction in Berkshire’s stake in the company, yet as of the first quarter this year, it still held the largest position in their investment portfolio.
As one of the biggest publicly-traded companies and often at the forefront of technological advancements, Apple – known as the “Magnificent Seven” stock – has consistently been a pioneer, introducing groundbreaking products like the MacIntosh computer, MacBook, iPad, AirPods, and the iPhone. Given this track record, it’s no wonder that Apple is making its mark in the realm of artificial intelligence by seamlessly integrating AI technology into its product lineup.
Recently, Apple unveiled Apple Intelligence, a comprehensive collection of AI technologies. These tools encompass advanced methods for writing on Apple devices, innovative approaches to generate images and visual content, and techniques to enhance AI and machine learning within Siri, their conversational chatbot, which now includes capabilities similar to ChatGPT. Essentially, Apple has made a supercomputer accessible to all through the iPhone, implying that we can expect more AI features in iPhones in the future. Apart from these, AI is also employed by Apple for various functions within the iPhone, such as battery management, voice recognition, fraud detection in Apple Pay, and Face ID.
2025 has been a tough year for this stock, with a 13.5% drop as of July 15th. The ongoing turmoil due to tariffs has particularly affected Apple since a significant portion of its supply chain is in China and Vietnam. Currently trading at 29 times forward earnings, which is slightly above its five-year average, there are short-term worries about the stock. The tariff situation isn’t resolved yet, and it seems investors are eager to see Apple make more strides in AI technology. Despite these concerns, given Apple’s strong brand and market position, I believe the company will navigate through this adversity, making long-term investors confident.
2. American Express: 16.4% of portfolio
As an ardent follower of finance, I’ve always been intrigued by American Express (AXP). However, it’s crucial to note that this esteemed credit card and payment company may not be typically categorized as a cutting-edge AI stock. The reason lies in its fundamental nature – it operates as a bank at its core. This means it must adhere to regulatory capital requirements, which sets it apart from more tech-focused AI companies.
Since the Great Recession, the banking sector has struggled to keep pace with the broader market. In fact, banks have underperformed significantly during this period. Moreover, they face cyclical challenges because they extend loans, and these loans can become problematic during economic downturns when borrowers may struggle to repay.
In essence, American Express, despite its technological advancements in payment solutions, remains deeply rooted in the banking sector, which comes with unique challenges and opportunities.
While American Express doesn’t function like a typical bank, it manages a closed-loop payment system instead. For many years, Buffett has held their stock, and it’s clear that the company is leveraging AI and machine learning for automation purposes and to streamline intricate aspects of both its banking and payment operations.
American Express boasts a 17-member Frontier Research Team dedicated to exploring ways of integrating Artificial Intelligence (AI) and Machine Learning (ML) throughout its business operations. This team identifies opportunities where AI can aid in marketing to new customers and assessing their eligibility for products. Additionally, they aim to leverage AI to facilitate virtual account management for customers, enhance customer service, and streamline payment processes.
One application of the Frontier team focused on exploring ways AI/ML could enhance credit approvals and fraud detection. They relied heavily on data preparation, a process where raw data is structured using AI/ML to make it simpler to examine. This not only saves time for crucial tasks but also aids the company in refining and strengthening its credit prediction models.
For many years, American Express has been a top choice for stock ownership, and it’s only natural that they lead the way in innovation. Their revenue model, which includes generating income from interest on credit card loans given to higher-income individuals and fees from a vast payment system, is hard to imitate.
3. Amazon: 0.8% of portfolio
The tech-and-e-commerce giant Amazon (AMZN), unlike the two previously mentioned stocks, represents a relatively minor holding for Buffett. However, it could potentially be Berkshire Hathaway’s most conventional investment in artificial intelligence.
Apart from enhancing its vast e-commerce platform by incorporating AI technology for streamlined logistics and targeted product promotion, Amazon has previously announced plans to invest approximately $100 billion in capital expenditures related to AI. Amazon Web Services (AWS), their cloud service, offers a perfect platform for this integration as it allows businesses to operate online without needing physical infrastructure. Now, Amazon can provide additional AI services that companies can utilize without having to construct their own AI-specific infrastructure.
As an observer, I’ve noticed that Amazon, since the launch of ChatGPT by OpenAI in 2022, has been actively constructing data centers and investing in hardware to fuel AI technology. This tech giant has also introduced a variety of AI tools and products. For instance, they unveiled Rufus, a shopping chatbot, a set of large language models for developing AI applications, and even their own semiconductor chip named Trainium.
Amazon, with its global operations, has faced challenges related to tariffs due to many of its sellers and products being based outside or not manufactured in the U.S. However, given the vast possibilities for businesses to transition to the cloud and the potential for widespread adoption of artificial intelligence (AI), it’s challenging to imagine that Amazon won’t reap long-term benefits from this AI revolution.
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2025-07-20 12:05