Business mogul Warren Buffett’s Apple investment (ticker: AAPL) reigns supreme in Berkshire Hathaway’s equity portfolio worth $360 billion. With an ownership stake of nearly 5.8 percent, the tale of Berkshire Hathaway’s Apple stock began in 2016 and has been proliferating since. AAPL’s gains have grown to a position of $110 billion – approximately 40 percent prominence in Berkshire’s stock holdings.
Warren Buffett’s investment strategies and philosophies are highly acclaimed due to the billionaire’s penchant for business and financing. The rapid growth of AAPL stocks as a fixture in Berkshire foreordained its annual shareholders’ meeting to furbish Buffett’s musings on Apple stock analysis. Investors are eagerly awaiting Buffett’s impressions of the tech company’s ventures into augmented reality headsets, computer chip manufacturing and Apple’s expansion in India.
“The iPhone is truly a global product and we’re doing well in emerging markets currently, which helped us offset some macroeconomic challenges.”
– Luca Maestri, CFO, Apple
AAPL gains, owing to iPhone sales, have surged by 30 percent. Apple’s stock growth potential is a salient nod towards the profitable iPhone sales exceeding the industry’s expectations, despite a 3 percent revenue decline year-over-year.
Warren Buffett’s Investment Philosophy: Apple Is A “Jewel”
In 2020, Buffett had flagged his latest stock picks in the Apple investment as one of four “jewels” of Berkshire Hathaway, tagging along the company’s insurance operations, ownership of railroad BNSF and the Berkshire Hathaway Energy subsidiary.
Buffett’s bet on AAPL stocks holds a candle to Berkshire’s expectations of incredible shareholder returns, brand recognition and an efficient management team. But the Oracle of Omaha did not hasten and arrive on the docks of Apple shares immediately.
Buffett’s smooth ride with Apple did not begin after the iPod’s successive launch in 2001, nor after the iPhone unveiling in 2007, but rather after the growth in the big tech’s services business.
In 2015, Apple’s annual services revenue of $19.9 billion and wearable revenue of $10.1 billion transformed in 2022 into $78.1 billion and $41.2 billion respectively.
Buffett’s investment portfolio is eagle-eyed on the benefits of share buybacks which has been long highlighted through his long-time holdings such as Coca-Cola and American Express – having been predisposed to outshining dividend payments to Berkshire.
“Our cost for Apple’s stake was $36 billion. Since then, we have both enjoyed regular dividends averaging about $775 million annually and also pocketed an additional $11 billion by selling a small portion of our position.”
– Buffett in his 2020 annual shareholder letter.
Despite the sale, Berkshire owns about 5.8 percent of Apple today. Apple’s board has authorized an additional $90 billion in buybacks after the tech giant boosted the dividend by 4 percent and AAPL shares rose about 2 percent in aftermarket trading.
Warren Buffett’s Portfolio Stock Picks: Apple Stock in Berkshire Hathaway
Apple has truly embodied a prominent arbiter of tech taste, with the domestic and global economy. AAPL’s gains with the surge in premium iPhone sales due to strong demand, despite a second straight quarter of declining revenue, affirms the tech giant’s resilience to economic uncertainty.
Buffett’s stock picks never fall short on its management team – he has always been of high praise for Apple CEO Tim Cook. While Buffett admits that Cook was underappreciated for a long while, he believes that AAPL stocks will soar indefinitely because Cook is one of the best managers in the world. And the satisfaction rate of people hooked to Apple’s products is 99 percent.
“Tim Cook, Apple’s brilliant CEO, regards users of Apple products as his first love. But all of his other constituencies benefit greatly from Tim’s managerial touch as well.”
Recently, the tech giant launched its high-yield savings account with Goldman Sachs. Last month, Apple opened its first retail store in India – a beacon of bright profitability for the Tim Cook-led company, at the moment. Apple is gravitating to diversify its supply chain away from China to India. iPhone sales surpassed the expected $48.7 billion by 1.5 percent to $51.3 billion.
