Warren Buffett Sells Apple Stock and Buys a Trillion-Dollar AI Stock Up 12,180% Since Its IPO

Berkshire Hathaway materially reduced its Apple stake (selling 41.7 million shares and cutting the position by 74% over two years, though it still represents ~21% of the portfolio) and initiated a new, modest position in Alphabet (17.8 million shares, ~2% of the portfolio), a notable shift given Buffett’s historical avoidance of tech. Apple posted solid September-quarter results—revenue $102 billion (+8%) and non‑GAAP EPS $1.85 (+13%)—and benefits from a 2.35 billion‑device installed base and potential AI monetization via Apple Intelligence, but the stock looks expensive at ~36x earnings with consensus ~10% CAGR (PEG ~3.6). Alphabet also beat estimates—revenue $102 billion (+16%) and GAAP EPS $2.87 (+35%)—with accelerating AI demand, strength in ad conversion, Google Cloud and custom TPUs, and Waymo expansion; with expected earnings growth of ~16% and a ~30x multiple (PEG ~1.9), the company appears more attractively valued and justifies consideration for a small buy.

Analysis

Berkshire Hathaway's latest 13F activity shows a material portfolio tilt: management sold 41.7 million Apple shares, reducing the holding by 74% over two years though Apple still represents roughly 21% of Berkshire's $267 billion U.S. equity exposure, and established a new 17.8 million-share position in Alphabet that now equals about 2% of the portfolio—notable given Buffett's historical tech caution.

Apple delivered solid September-quarter results with revenue of $102 billion (+8%) and non-GAAP EPS of $1.85 (+13%), supported by iPhone, Mac and services strength and a 2.35 billion-device installed base; management's rollout of Apple Intelligence (currently free) and plans for paid AI features create monetization optionality, but consensus 3-year EPS growth of ~10% and a ~36x P/E (PEG ~3.6) suggest the stock is priced for perfection.

Alphabet reported revenue of $102 billion (+16%) and GAAP EPS of $2.87 (+35%), citing strong AI infrastructure demand, adoption of custom TPUs, improved ad conversion from AI Max, Google Cloud leadership in LLM tools, and Waymo expansion; with ~16% expected EPS CAGR and a ~30x P/E (PEG ~1.9), Alphabet appears more attractively valued and is a logical candidate for incremental exposure given current fundamentals and AI catalysts.

Key Decisions for Investors

• Reassess concentrated Apple exposure given its 36x P/E and PEG ~3.6; consider trimming or avoiding new allocations until AI monetization translates to clear paid-revenue signals or valuation compresses
• Consider initiating or modestly adding to Alphabet exposure because Q3 showed 16% revenue growth, 35% EPS growth, strong AI infrastructure demand, and a more attractive PEG (~1.9) relative to Apple
• Size new technology exposure conservatively and use position limits or incremental dollar-cost averaging given execution risk around AI monetization and potential macro volatility
• Monitor near-term catalysts: Apple’s timeline for paid AI features, Alphabet’s ad conversion trends and cloud AI adoption metrics, TPU third-party uptake, and Waymo commercialization milestones as triggers to increase or reduce exposure