Ben Graham, Warren Buffett’s mentor, authored one of the most venerated investment manuals of all time, The Intelligent Investor. The title of this book accurately describes Warren Buffett.
Today, however, we could possibly refer to Buffett as an artificial intelligence (AI) investor. The Oracle of Omaha is one of the world’s largest investors in artificial intelligence. Buffett has invested over $156 billion in two leading artificial intelligence equities.
Buffett’s major AI investments
It is likely not difficult to predict which stock represents Buffett’s largest AI wager. Berkshire Hathaway (BRK.A 0.47%) (BRK.B 1.21%) possesses approximately $155.5 billion worth of Apple (AAPL 4.69%) stock, which includes shares held in the portfolio of Berkshire subsidiary New England Asset Management. Berkshire also holds a substantial stake in Amazon (AMZN 1.59%) valued at over $1.1 billion.
Apple and Amazon represent a combined investment of well over $156 billion. Technically, Buffett is even more significantly invested in AI, as many of Berkshire’s portfolio companies use the technology in their operations. However, Apple and Amazon stand out due to their leadership in artificial intelligence.
Apple may seem almost like an afterthought in AI discussions in light of recent events. Nonetheless, it is evident that the corporation is pondering extensively about AI. In Apple’s first-quarter conference call in February, CEO Tim Cook stated that AI “will affect every product and service we have.”
Amazon, on the other hand, has recently made ripples within the AI industry. With the release of Bedrock last month, the company threw a curveball in the AI race.
This new AI service enables customers to rapidly develop and deploy generative AI applications using foundational models (FMs), which are extremely large models that have been pre-trained with vast quantities of data. Bedrock supports FMs from Amazon, AI21 Labs, Stability AI, and Anthropic.
Two creases
Buffett presumably did not have AI in mind when Berkshire purchased these AI-related equities, which adds a twist to his massive investment. Amazon has been one of Berkshire’s holdings since 2019, while Apple has been a part of the portfolio since 2016.
Apple and Amazon were already investing significantly in AI at the time. Nevertheless, it is accurate to say that AI was not nearly as popular as it is today. Additionally, Buffett only invests in areas he comprehends. Last month, he admitted in an interview with CNBC that he does not comprehend AI and that he does not “know if it’s beneficial.”
There is another complication with Amazon. Buffett did not decide to purchase the equity. In 2019, he told CNBC that “one of the fellows in the office who manage money” — a reference to Berkshire’s investment managers Todd Combs and Ted Weschler — initiated the purchase of the e-commerce and cloud colossus.
Still, Buffett is a big fan of Amazon, stating that he was “an idiot” for not purchasing the stock earlier. And he is extremely fond of Apple. It is the largest investment in Berkshire’s portfolio.
What are the best options for investors?
On the heels of ChatGPT’s success, Apple has received criticism for its dearth of a distinct generative AI strategy. I believe, however, that the company will be a huge success in delivering AI to its devices. Reportedly, Apple is also developing an AI-powered health coaching service. My opinion is that the tech behemoth has additional AI cards that we do not yet know about.
Amazon’s Amazon Web Services (AWS) cloud unit presents the highest AI opportunity for the company. In the company’s most recent Q1 teleconference, CEO Andy Jassy stated that “few people understand how much new cloud business will be generated over the next several years as a result of the impending flood of machine learning.”
I believe that Buffett’s top two AI equities are also wise investments for other investors. And Apple and Amazon’s artificial intelligence (AI) opportunities are key reasons why I am bullish.
