Could Apple Soon Lose Its Top Position in Warren Buffett’s Portfolio?

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The news is confirmed – Warren Buffett won’t serve as CEO of Berkshire Hathaway (BRK.A) (BRK.B) beyond 2025. This has left many investors curious about what adjustments may be made in the company’s portfolio once Buffett steps down and his lieutenants assume complete management control.

Currently, Apple (AAPL) holds the largest stake in Warren Buffett’s investment portfolio, valued at approximately $63 billion. Given Buffett’s obvious enthusiasm for the company, one might wonder if this position could be reduced, or even sold off after his departure. However, you might find the response intriguing.

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Buffett may not be the genius behind Berkshire’s Apple investment

One key aspect to grasp regarding Warren Buffett’s Apple investment is that it wasn’t necessarily Buffett who first made the decision to invest. In the past, Buffett and his long-term investing partner Charlie Munger encountered Ted Weschler and Todd Combs. As Buffett puts it, these two were “the only individuals we could find who read as much as we did.” Eventually, both men joined the Berkshire Hathaway investment team. In simpler terms, you can say that the Apple investment might have been initiated by someone else within the Berkshire Hathaway team, such as Weschler or Combs.

In the year 2016, Berkshire Hathaway made its first $1 billion investment in Apple. Interestingly, Buffett had traditionally steered clear of tech companies. He didn’t own a computer and hadn’t used an iPhone until 2018 – that’s two years after the Apple investment was made. It was actually Combs and Weschler who managed to get Apple included in Berkshire Hathaway’s investment portfolio.

In a 2016 interview, Weschler shared their perspective. They weren’t only attracted to Apple’s hardware products. They also appreciated the company’s shift towards software, which developed a unified ecosystem that enabled all devices to function smoothly together. As Weschler put it, “Once you are deeply immersed in the [Apple] App ecosystem, with your countless photos stored in the cloud and accustomed to the keyboard shortcuts and functionalities, you become a consumer who is hard to detach.

Approximately concurrently, Buffett posed a task to Combs: Find a stock within the S&P 500 that has a price-to-earnings ratio below 15 and is capable of delivering at least 7% yearly earnings growth over the next five years. Eventually, Combs pinpointed Apple, which was also the stock that had captured Weschler’s affections.

Will Apple stock rebound in 2025?

It’s unlikely that Berkshire Hathaway will sell its Apple shares just because Buffett is leaving the company. In fact, it was Combs and Weschler who initially invested in Apple, not Buffett, and they are expected to remain with the firm for years to come. However, there’s a potential issue: Over the past year, Apple’s value has decreased by approximately 10%, while the rest of the market has seen significant growth.

Is it possible that Berkshire Hathaway might sell off its Apple stock because of its recent poor performance? It appears that Berkshire has been gradually reducing its holdings. In 2024, Apple made up about half (50%) of Berkshire’s publicly traded portfolio. However, today it represents approximately 24%. This shift has moved the technology sector from an overrepresented sector in Berkshire’s portfolio to an underrepresented one.

Following the dip, Apple’s stock is currently trading at a multiple of 32 times its trailing earnings. This high valuation is justified because the business is predicted to grow earnings by only 6.5% this year. Given this, it seems likely that Berkshire Hathaway will further reduce its stake. However, these adjustments are primarily driven by valuation considerations rather than recent performance or Buffett’s upcoming departure as CEO.

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2025-07-20 08:33