Warren Buffett Has 23% of Berkshire Hathaway's Portfolio Invested in 2 AI Stocks Up 600% and 900% in the Last Decade

Berkshire Hathaway has a significant portion of its portfolio allocated to Apple (21.8%) and Amazon (0.8%), both of which have AI initiatives. Apple is working to monetize AI through its devices and services, though iPhone sales have been flat and analysts have downwardly revised earnings estimates to 6% annually through fiscal 2026, making its valuation of 28 times earnings look expensive. Amazon is leveraging AI to improve efficiency and margins in its retail and cloud computing businesses, with CEO Andy Jassy viewing AI as a major opportunity; analysts estimate Amazon's earnings will increase at 10% annually through 2026, but the author believes this is underestimated due to AI investments.

Analysis

Berkshire Hathaway maintains substantial exposure to the artificial intelligence sector through significant holdings in Apple (21.8% of its portfolio) and Amazon (0.8%). Apple's investment thesis is built on its leading smartphone market position and its extensive services ecosystem, now looking to integrate 'Apple Intelligence' AI features. Despite introducing Apple Intelligence, iPhone sales have been flat over the last six months, and consumer adoption has been lukewarm, partly attributed to delays in significant Siri upgrades and reports suggesting Apple trails competitors in advanced AI development. Apple aims to indirectly monetize AI by opening its large language models to third-party developers. However, due to tariff uncertainty, Wall Street has revised Apple's earnings growth estimates down to 6% annually through fiscal 2026, making its current valuation of 28 times earnings appear relatively high. In contrast, Amazon is leveraging AI to enhance efficiency and expand margins in its dominant e-commerce business and its market-leading Amazon Web Services (AWS) cloud platform. CEO Andy Jassy emphasized AI as a transformative opportunity, with Amazon's AI business already achieving a multi-billion-dollar annual revenue run rate and triple-digit year-over-year growth. AWS is actively expanding its AI capabilities with custom chips, the Bedrock AI development platform, and the Amazon Q assistant. While Amazon's stock trades at 35 times earnings with analysts forecasting 10% annual earnings growth through 2026, the company has a track record of exceeding consensus estimates, beating them by an average of 21% over the last six quarters, suggesting potential underestimation of its AI-driven growth.

Key Decisions for Investors

• Regarding Apple (AAPL), investors should weigh its current valuation of 28 times earnings against flat iPhone sales, significant delays in AI feature deployment, and a projected 6% annual earnings growth through fiscal 2026; it may be prudent to await a more attractive entry point or tangible progress in AI monetization and resolution of tariff impacts.
• For Amazon (AMZN), its aggressive AI integration across retail and AWS, coupled with strong AI revenue growth and a history of surpassing earnings expectations, could justify its 35 times earnings multiple for investors confident in AI's continued contribution to revenue and margin expansion beyond current analyst projections.
• Investors should closely monitor the execution of AI strategies at both companies, particularly Apple's ability to effectively commercialize Apple Intelligence and overcome developmental hurdles, and Amazon's capacity to sustain its AI-driven growth trajectory and operational improvements.