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Warren Buffett's AI Bets: 46.1% of Berkshire Hathaway's $353 Billion Stock Portfolio Is Held in These 2 Artificial Intelligence (AI) Growth Stocks

Motley Fool - Sun Sep 17, 4:03AM CDT

Berkshire Hathaway CEO Warren Buffett is most famous for his legendary success as a value investor. On the other hand, 46.1% of his company's $353 billion stock portfolio is actually held in just two artificial intelligence (AI) growth stocks right now.

To shed some light on how the Oracle of Omaha's current bets on AI are positioned, two Motley Fool contributors have profiled a top AI stock in the investment conglomerate's portfolio. Read on for a look at one AI company that Berkshire has placed an absolutely massive bet on -- and another smaller bet that's also poised to be a long-term winner.

Apple has proven it can harness the power of new technology

Parkev Tatevosian: Warren Buffett's Berkshire Hathaway portfolio may not have invested in Apple(NASDAQ: AAPL) stock because of AI, but Apple could be one of the prime beneficiaries of the technological breakthrough. Apple's iPhones, iPads, computers, and more could all benefit from the infusion of AI. One such example is the voice assistance Siri. In its current form, Siri is not nearly as intuitive as it could be. Still, people can download the ChatGPT app on the iPhone, which makes the device more valuable to users.

Moreover, AI is still in the very early stages of development. It would be reasonable to assume that Apple will incorporate more nascent technology in its devices and services over the next several years. Already, Apple has grown to $394 billion in revenue in 2022. It has achieved this feat by relentless innovation. Warren Buffett is not one to get excited about a company after only one or two successes. Instead, The Oracle of Omaha is more interested in companies that have demonstrated that skill over several iterations.

Notably, Apple turns innovation into profits. There have been many remarkable inventions in our history. Fewer still have turned into successful businesses. Apple has achieved both great innovation and profits. Indeed, Apple's operating income in 2022 surpassed $119 billion. Looking at these achievements, it's no surprise that 45.7% of Berkshire Hathaway's portfolio is invested in Apple stock.

Amazon will score AI wins on multiple fronts

Keith Noonan: Beyond Apple, large Berkshire Hathaway holdings including Bank of America and American Express will likely see some significant tailwinds related to artificial intelligence. But you actually have to go much further down the investment conglomerate's weighted stock portfolio list to find a company that would commonly be considered an "AI stock."

Coming in at just 0.4% of Berkshire's total stock holdings, Amazon(NASDAQ: AMZN) stands as just the 23rd largest position in the conglomerate's portfolio. But while Buffett's exposure to the stock remains relatively small, the e-commerce and cloud computing giant has a good chance of being one of the AI revolution's biggest winners.

In the short term, the impact of artificial intelligence will be most visible in the company's Amazon Web Services (AWS) cloud-infrastructure business. Amazon remains the world's leading provider of cloud services, and the company's infrastructure stands to see rising demand as a growing number of AI applications are launched and scaled.

But AWS isn't the only business segment that will benefit from AI. While the transformative potential will likely take longer to materialize, artificial intelligence will likely make Amazon's e-commerce business far more profitable.

Amazon still generated most of its revenue from online retail, but the business has historically been relatively low margin. As AI paves the way for improved automation at warehouses and makes high-performance self-driving delivery vehicles possible, operating costs for the company's e-commerce business should fall. In turn, the company's largest source of sales stands to become far more profitable.

Apple and Amazon look like long-term AI winners

Thanks to their technology advantages, funding strength, and other competitive edges, large tech companies will likely be the AI revolution's biggest winners. Apple and Amazon each enjoy huge platform and infrastructure advantages that will be very difficult for competitors to disrupt, and these strengths position each company to push artificial intelligence forward and reap the benefits. For long-term investors looking to capitalize on today's hottest tech trend, building positions in both stocks would be a smart move.

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American Express is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Noonan has no position in any of the stocks mentioned. Parkev Tatevosian, CFA has positions in Apple. The Motley Fool has positions in and recommends, Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.

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