2 Warren Buffett Stocks I'd Sell Right Now

The article raises concerns for long-term investors regarding Berkshire Hathaway's significant holdings in Apple and Sirius XM. Apple is criticized for prioritizing stock price growth through substantial share buybacks over critical long-term innovation, particularly in generative AI, where it lags peers and relies on external solutions like Google's LLM. Concurrently, Sirius XM is identified as a company in a fading industry, already disrupted by modern in-car entertainment options, leading to declining revenue and EBITDA despite its current profitability and low valuation, suggesting limited growth prospects.

Analysis

Apple faces significant challenges in generative AI, evidenced by its reported plan to pay Google $1 billion annually for LLM technology for Siri, highlighting a substantial technological gap. The company's $14 billion in current fiscal year capital expenditures is notably lower than peers like Microsoft ($94 billion) and Meta Platforms ($70 billion), suggesting underinvestment in critical future technologies. This strategic choice risks positioning Apple as a laggard if AI proves transformational.

Management's focus appears to be on short-term stock price enhancement, demonstrated by the $100 billion share repurchase plan announced in May. This capital allocation, prioritizing buybacks over aggressive AI investments, raises concerns about the company's long-term innovation pipeline and ability to maintain technological leadership.

Sirius XM operates in a fading industry, significantly disrupted by emerging in-car entertainment options like Apple CarPlay and Android Auto. This is reflected in its financial performance, with third-quarter revenue declining approximately 1% year-over-year and adjusted EBITDA falling 2% to $676 million. Despite its satellite radio monopoly and a low forward P/E of 7.2, its long-term growth potential is severely constrained.

The analysis suggests both Apple and Sirius XM, significant Berkshire Hathaway holdings, face structural headwinds. Apple's strategic missteps in AI and Sirius XM's industry obsolescence present considerable long-term risks, challenging their positions as viable growth investments.

Key Decisions for Investors

• Re-evaluate Apple's long-term growth potential, considering its underinvestment in generative AI and prioritization of share buybacks over innovation.
• Assess the structural headwinds facing Sirius XM, including declining revenue and EBITDA, due to significant industry disruption from alternative entertainment options.
• Monitor Apple's future capital allocation decisions and AI development progress, while considering Sirius XM's limited growth prospects despite its low valuation.