29.3% of Berkshire Hathaway’s $316 billion stock portfolio is held in these two artificial intelligence (AI) growth stocks

Warren Buffett is one of the most successful investors in history. Born in Omaha, Nebraska in 1930, Buffett went on to provide one of the most incredible earnings records. From the acquisition of a controlling share in Berkshire Hathaway and becoming its CEO in 1965, the Oracle of Omaha saw returns of over 3,800,000% — enough to turn a $1,000 investment into over $38 million.

But while Buffett is best known as a market-beating investor, his company’s stock portfolio actually has substantial exposure to artificial intelligence (AI) and other growth trends. If you want to take a page out of the famous investor success playbook, read on to see two AI stocks that make up 29.3% of Berkshire’s stock.

How is Buffett playing the AI ​​stock trend?

Keith Noonan: Following volatile trades, Apple (NASDAQ:AAPL) bounced back to once again become the world’s most valuable company. With a market cap of about $3.44 trillion, the company actually has a significant lead over Nvidia and Microsoft — which are valued at $3.11 trillion and $3.08 trillion, respectively.

Representing about 28.8% of Berkshire Hathaway’s total stock portfolio, Apple is by far Buffett’s biggest overall bet and the cornerstone of the company’s AI investments. But reading about Berkshire’s AI strategy has gotten a little harder recently.

In the second quarter, Berkshire actually sold 389 million Apple shares. The move reduced the investment conglomerate’s total holdings in the tech giant by 49%.

With Apple shares hitting a new all-time high in the first half of the year, it’s no shocker that Berkshire opted to take some profits, diversify its portfolio weighting and increase its cash pile. But there may be other reasons why Buffett and his analysts opted to sell some Apple stock.

Overall, Berkshire’s recent moves and comments suggest that the company is taking a cautious approach to the stock market in general. There may also be some uncertainty about Apple’s position in the booming and changing world of artificial intelligence.

The iPhone has been an incredible performance engine and has frequently made Apple the most profitable business in the world on an annual basis for the past decade. The company has dominated the mobile hardware space and continues to look very strong overall, but AI is a disruptive technology that could change the positioning of the industry. On the other hand, the power of the iPhone gives Apple solid foundations for its AI hardware and software initiatives.

The story continues

With the release of the iPhone Pro 16 next month, Apple will take its first big step into mobile hardware tailored for artificial intelligence. AI-centric phones appear to be the next big step forward for the mobile space and could end up being the next growth engine for the otherwise stagnant mobile market. No other company has a stronger position in the overall mobile space, and the industry leader will have opportunities to leverage those foundations to make big gains in AI.

AI could end up being a powerful performance driver for Apple. But as Buffett’s recent moves suggest, it might be wise not to put all your eggs in one basket at this stage of the game.

Amazon has an advantage in cloud computing

Jennifer Saibil: It never made sense to bet against Amazon (NASDAQ: AMZN)and these days he seems as strong as ever. Its e-commerce business is still healthy and it’s making strides in streaming as well as other segments, but what’s really driving interest these days are the incredible opportunities in AI.

Amazon is not one to miss trends. In fact, they’re more likely to catch trends and fail than miss the chance to become a leader in the next big thing. So much has been done and that is why he is now a master of many diverse and profitable businesses.

Amazon has been at the forefront of artificial intelligence for years, using it to power its store business with features such as product recommendations and arranging deliveries. Generative AI is what’s creating excitement these days, and Amazon has its huge data warehouses to drive innovation and growth in this area. It offers a wide range of services to its Amazon Web Services customers and sees its advantage in its three-tier system. The highest tier is services for developers to create their own large language models (LLMs) with full customization, the middle tier is for developers to use Amazon’s LLMs for a semi-custom experience, and the lowest tier is bottom is for smaller businesses to use turnkey. generative AI systems for solutions such as a total marketing campaign or product images and descriptions.

Management says there has already been a robust response with high usage of its products. And he sees this as just the beginning. CEO Andy Jassy said that in the past year and a half, Amazon has released more than twice as many features as all other major cloud companies — combined. “This team is cooking,” Jassy said, “but we’re not done adding capabilities for our customer interface.”

Artificial intelligence wouldn’t normally be on Buffett’s portfolio, and at just 0.5% of his total portfolio, Berkshire’s position in Amazon isn’t nearly as large as its Apple holdings. But Amazon as a company is supported by its unbeatable e-commerce business and its low-resource cloud computing segment, which is also the #1 leader in the industry. Get the best of both worlds with Amazon: the trusted Amazon name and great AI opportunities.

Despite all of this, Amazon’s stock fell after its second-quarter earnings release and is trading near its lowest valuation in years. Wall Street didn’t like its sales guidance and the slight decline in revenue in the second quarter. That makes this an unusual opportunity to buy this Buffett stock at a great price that you don’t want to miss.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Jennifer Saibil holds positions at Apple. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.

Warren Buffett’s AI bets: 29.3% of Berkshire Hathaway’s $316 billion stock portfolio is held in these 2 artificial intelligence (AI) growth stocks was originally published by The Motley Fool