Warren Buffett's Major Investment in AI Technology Stocks

Published March 22, 2024

Renowned investor Warren Buffett, CEO of Berkshire Hathaway, has made a notable move in the investment world by allocating a significant portion of his company's portfolio to artificial intelligence (AI) stocks. Known for his strategic, long-term investments, Buffett has diversified his holdings to include cutting-edge technology in AI. With Berkshire Hathaway's portfolio valued at $366 billion, a staggering 44%, or about $159 billion, is invested in three AI stocks that are not commonly associated with the AI industry, such as Nvidia.

Apple's Dominant Role

The majority of this AI-related investment lies with Apple, which makes up 42.8% of Berkshire's invested assets. Despite Apple not creating the underlying AI infrastructure, it integrates AI across its products, contributing to its massive growth. AI features are central to Apple products, including the iPhone, whose keyboard enhancements and predictive text are AI-driven. Furthermore, Apple's new Vision Pro headset features AI for eye- and hand-tracking technologies.

Berkshire Hathaway sees value in Apple beyond just AI, praising its strong customer loyalty, management, and substantial capital return programs. This has allowed Berkshire to increase its stake in Apple over time progressively.

Amazon's Expanding Use of AI

Amazon, which constitutes 0.5% of invested assets, is also a part of Buffett’s AI stock collection. The e-commerce giant leverages AI for product recommendations, and through its cloud division, Amazon Web Services (AWS), allows customers to create AI-driven applications and services. AWS's significance lies in its substantial contribution to Amazon's operating income and leadership in the cloud infrastructure services market.

Amazon's approach to AI and cloud services evidently aligns with Berkshire's investment strategy, despite the company's departure from traditional value stock criteria.

Snowflake: A Distinct AI Investment

The final company making up the 44% AI investment is Snowflake, with 0.3% of Berkshire's invested assets. This cloud data-warehousing firm is notable for its collaboration with Nvidia to enhance AI capabilities and offer generative AI solutions to its customers. Snowflake's unique selling points include its data sharing capabilities and transparent pay-as-you-go pricing model. While boasting strong advantages, Snowflake's premium valuation and reduced sales growth projections have urged investors to proceed cautiously.

Buffett, AI, Investments