Warren Buffett’s Berkshire Hathaway portfolio has a significant 23% stake in two tech giants often linked to artificial intelligence: Apple (AAPL) and Amazon (AMZN). Apple accounts for a dominant 21.8% of the portfolio, having seen a 600% surge in the last decade, while Amazon, representing 0.8%, has soared 900% in the same period.
Apple: Brand Power Meets AI Ambitions
Apple’s investment thesis rests on two pillars: its global leadership in smartphone sales and its strategy to monetize its vast installed base of over 2.35 billion devices. The company’s strong brand and integrated hardware-software ecosystem give it considerable pricing power.
A key part of its future growth, many analysts believe, lies in artificial intelligence. Apple introduced Apple Intelligence late last year, a suite of AI features for the iPhone that CEO Tim Cook hailed as ushering in a “new era.” While initially free, there’s speculation about future subscription monetization for advanced features.
However, consumer response to Apple Intelligence has been lukewarm, with iPhone sales remaining flat. This might be due to delayed upgrades to Siri’s conversational capabilities. Recent reports from Bloomberg suggest Apple is years behind competitors in developing a ChatGPT-like product, and the timeline for Siri’s enhancements is still uncertain.
Despite these setbacks, Apple recently announced plans to open its Apple Intelligence large language models to third-party developers. This move aims to indirectly monetize AI by fostering a wave of new AI-powered applications on the App Store.
Wall Street has adjusted its earnings estimates downward for Apple due to tariff uncertainty, forecasting only 6% annual growth through fiscal 2026. This makes its current valuation of 28 times earnings appear expensive, suggesting caution for investors unless the price drops or tariff issues resolve.
Amazon: A Diversified AI Play Across E-commerce, Advertising, and Cloud
Amazon’s investment appeal comes from its formidable position across three major industries: e-commerce, retail advertising, and cloud computing (Amazon Web Services – AWS). It commands the largest e-commerce marketplace outside China, is the world’s biggest retail advertising company, and AWS leads the public cloud infrastructure market.
AI is central to Amazon’s strategy to boost efficiency and expand margins, particularly in its retail business. CEO Andy Jassy revealed the company is building around 1,000 generative AI applications to optimize various operations, from coding to customer service and logistics. Morgan Stanley even called Amazon’s retail segment the “most underappreciated” beneficiary of generative AI.
In its cloud computing arm, AWS, Amazon is heavily investing in AI infrastructure. They’ve developed custom semiconductors for AI training and inference, which management claims offer superior price performance compared to leading GPUs. AWS has also launched Bedrock, a generative AI development platform, and Amazon Q, a coding and business assistant.
Berkshire Hathaway holds substantial stakes in Apple and Amazon, companies with growing AI ambitions. Though in current times Apple, despite its strong brand and new Apple Intelligence features, faces lukewarm consumer response and lags in conversational AI development. Wall Street has lowered Apple’s growth forecasts due to tariff uncertainty, making its current valuation seem high. This highlights how even tech giants with AI initiatives can face market headwinds and valuation scrutiny.
