Artificial Intelligence (AI) is undoubtedly the hottest topic among investors right now. Everyone feels that this technology could change the game, so they want some exposure to it in their investment portfolios. Warren Buffett, one of the most famous investors in history, has always been cautious about tech stocks. However, his company, Berkshire Hathaway, has invested 29% of its public stock portfolio in a massive AI stock.
So, which stock is it? The answer is Apple Inc. Buffett's investment in Apple has been very successful. In recent years, Apple's stock price has soared, bringing substantial returns to investors. Although Buffett significantly reduced his holdings in Apple in the three months ending in June, Apple remains his largest stock holding.
While Nvidia has been in the spotlight during the AI boom, we cannot overlook the tech giants that are already at the forefront of digital trends. Apple is one such company. Although Apple was a bit slow to announce its AI strategy, the launch of the "Apple Intelligence" plan has garnered widespread attention.
The core goal of the "Apple Intelligence" plan is to make the company's various hardware devices more practical for consumers. This includes upgraded versions of the Siri assistant, enhanced writing tools, and the ability to generate images. New products will enable these AI features on the latest software and integrate with ChatGPT.
Many investors may be looking for companies that can launch new AI products and services, but I think this way of thinking might be incorrect. Instead, companies that already lead the industry and use AI to enhance their competitive advantage are more likely to succeed. Apple has a huge advantage in this regard, as it has over 2.2 billion active devices worldwide, allowing it to immediately push AI features to the market.
However, ultimately, I believe the main goal of Apple's AI plan is to sell more iPhones. After all, Apple is still a company primarily focused on smartphones, with 46% of its revenue coming from iPhone sales in the third quarter of 2024 (ending June 29). Apple CEO Tim Cook also expressed excitement about the value of "Apple Intelligence" during the earnings call, stating, "We believe this will provide users with stronger reasons to upgrade their devices."
So, is now a good time to buy Apple stock? Currently, Apple's price-to-earnings ratio is 34, much higher than the average levels over the past five and ten years. Such a high price is only justified if Apple's future growth significantly accelerates, but considering it's a mature company, future growth may not be as optimistic as expected.
Key Points:
🌟 Berkshire Hathaway, owned by Warren Buffett, has invested 29% of its public stock portfolio in Apple Inc.
📱 Apple's "Apple Intelligence" plan aims to enhance the practicality of hardware devices through AI technology.
💰 Apple's high price-to-earnings ratio requires investors to carefully consider whether to buy.