Is Buffett going to enter the AI field? Which AI companies has he invested 398.7 billion in?
By Anthony Di Pizio
Compiled by: MetaverseHub
While it's not obvious that Buffett is chasing the latest stock market trends, a look at Berkshire Hathaway's portfolio shows that many of the stocks the company holds are benefiting from artificial intelligence.
Since 1965,Buffett has been leading Berkshire Hathaway Holdings.He likes to invest in companies with stable growth, reliable profitability, strong management teams, and shareholder-friendly initiatives such as dividend payments and stock buyback programs.
This strategy is indeed working. From 1965 to 2023, Berkshire's return rate has reached an astonishing 43,847,48%. This is equivalent to a compound annual return of 19.8%.This is almost twice the annual return of the S&P 500 Index of 10.2% during the same period..
In dollar terms, a $1,000 investment in Berkshire Hathaway stock in 1965 would have grown to more than $43 million, while the same investment in the S&P 500 index, with dividends reinvested, would have been worth just $312,333.
Buffett isn't an investor who chases the latest stock market trends, so you won't see him flocking to hot artificial intelligence stocks these days.
but,Here are three stocks that Berkshire currently owns that will benefit greatly from artificial intelligence., even accounting for more than 45% of Berkshire's total portfolio of publicly traded securities, totaling $398.7 billion.
01. Snowflake: 0.2% of Berkshire Hathaway's portfolio
Snowflake develops a data cloud platform, which can help enterprises bring together their key data on one platform, so as to analyze the data more effectively and tap the maximum value of the data.
The service is designed for large, complex enterprises that work with multiple cloud providers, such as Microsoft Azure and Alphabet's Google Cloud, a situation that often leads to the creation of data silos.
last year,Snowflake launches CortexAI platform, allowing enterprises to combine off-the-shelf large language models (LLMs) with their own data to create generative AI applications.
Cortex also comes with a full suite of AI tools, such as Document AI, which allows businesses to extract valuable data from unstructured sources like invoices or contracts, and Snowflake’s Copilot virtual assistant, which uses natural language prompts to provide valuable insights across the Snowflake platform.
In the first quarter of fiscal 2025, which ended on April 30, Snowflake's product revenue reached $789.6 million, up 34% year over year. On the surface, that's a strong growth rate, but it's a slowdown from previous quarters.
While Snowflake continues to invest heavily in growth initiatives like marketing and research and development, its rate of acquiring new customers is slowing, and existing customers are expanding their spending even more slowly.
Berkshire Hathaway bought a stake in Snowflake during the data cloud specialist's IPO in 2020, so the price per share was likely around $120.
In 2021, the stock soared to a high of $392, but has since fallen 63% from that level, with the current share price at $142. Unfortunately, the stock price still seems quite expensive due to the company's slowing growth.Investors may therefore want to avoid this Berkshire stock pick..
02. Amazon: 0.5% of Berkshire Hathaway's portfolio
Berkshire bought Amazon (AMZN1.22%) shares in 2019Buffett has repeatedly expressed regret for not discovering this opportunity earlier. Amazon was founded as an e-commerce company and later expanded into cloud computing, streaming media, and digital advertising.Now expanding into artificial intelligence.
Its Amazon Web Services (AWS) cloud computing unit designs its own data center chips, which are more powerful than other infrastructure that uses chips from Nvidia.AI developers can reduce costs by up to 50% using these chips.
In addition, Amazon's Bedrock platform also provides developers with a ready-made LLM library from some of the industry's leading startups. In addition, Amazon has also independently developed an LLM series called Titan.
Essentially, AWS wants to become the go-to destination for developers looking to create their own AI applications. Wall Street forecasts suggest thatArtificial intelligence will add $7 trillion to $200 trillion to the global economy in the next decade, which has the potential to be Amazon's biggest opportunity ever.
Berkshire Hathaway Inc. holds a $2 billion stake in Amazon, which represents just 0.51% of the conglomerate's stock portfolio.
In the long term,Artificial intelligence could drive big growth for AmazonSo if Buffett just wanted this position to be larger before, he may be kicking himself for not adding to it sooner now that the new chapter in AI has begun.
03. Apple: 44.51% of Berkshire Hathaway's portfolio
Apple Inc.L2.16%) is Berkshire Hathaway's largest holding to dateThe conglomerate has spent about $38 billion accumulating shares since 2016, and its holdings are now worth $177.6 billion.
Apple is dedicated to producing the world's most popular electronic devices, including iPhone, iPad, Apple Watch, AirPods and Mac computers.
The company is moving into artificial intelligence with its new Apple Intelligence software, which will be released in September alongside the iOS18 operating system.
The software was developed in collaboration with OpenAI, which will change the user experience of Apple devices. Siri voice assistant will use the functions of ChatGPT. Similarly, its writing tools such as notes, emails and iMessage will also use the functions of ChatGPT to help users quickly create content.
There are more than 2.2 billion active Apple devices worldwide.This means Apple may soon become the largest company distributing AI technology to consumers..
The upcoming iPhone 16 is expected to feature a powerful new chip capable of handling AI workloads on the device, potentially triggering a significant upgrade cycle.
Apple meets all of Buffett's stock-picking criteriaSince Berkshire’s initial investment in 2016, the company has grown steadily, remains profitable, has a committed leader in CEO Tim Cook, and has returned significant capital to shareholders through dividends and stock repurchases.
In fact,Apple just announced a new $110 billion buyback program, which is the largest buyback program in U.S. corporate history.
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