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Every Tech Stock Warren Buffett Owns, Ranked from Best to Worst

Motley Fool - Sun Aug 6, 2023

You might think that Warren Buffett and tech stocks simply don't go together. Buffett has famously avoided buying stocks that aren't in his wheelhouse. In some cases, he has invested in tech stocks -- but only because of the influence of other Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) investment managers.

However, you might be surprised at just how many positions in tech companies the legendary investor holds right now, especially if we include those in the portfolio of Berkshire subsidiary New England Asset Management (NEAM). Here is every tech stock Buffett owns, ranked from best to worst.

Megacap monsters

I think the top tech stocks for Buffett happen to be several of the biggest ones on the planet. They include three of the so-called FAANG stocks.

RankStockMarket Cap
1Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL)$1.6 trillion
2Apple(NASDAQ: AAPL)$3 trillion
3Amazon(NASDAQ: AMZN)$1.3 trillion
4Microsoft(NASDAQ: MSFT)$2.4 trillion

Data source for market caps: Google Finance. Chart by author.

A couple of notes are in order with these megacap monsters. First, Alphabet and Microsoft are in NEAM's portfolio. Buffett nonetheless has stakes in them, albeit indirectly. Second, some view Amazon as a consumer cyclical stock. However, with the world's largest cloud services platform and a massive online business, I've lumped Amazon in with tech stocks for this exercise.

I like (and personally own) all of these stocks. My main reasons for putting Alphabet at the top of the list were its more attractive valuation and its huge opportunities in artificial intelligence and (further down the road) quantum computing.

Up-and-comers

Berkshire Hathaway's portfolio features a couple of stocks that I view as promising up-and-comers, although one of them has already up and come quite a bit:

RankStockMarket Cap
5StoneCo(NASDAQ: STNE)$4 billion
6Snowflake(NYSE: SNOW)$53 billion

Data source for market caps: Google Finance. Chart by author.

StoneCo is one of the top fintech and e-commerce companies in Latin America. My hunch is that its market will continue to expand significantly.

I was somewhat leery of ranking Snowflake so highly because of its nosebleed valuation. Shares of the cloud company trade at 25 times sales. However, I do really like Snowflake's growth prospects.

Chips on the table

The next cluster of Buffett's tech stocks happens to consist entirely of chipmakers.

RankStockMarket Cap
7Taiwan Semiconductor Manufacturing(NYSE: TSM)$452 billion
8Qualcomm(NASDAQ: QCOM)$132 billion
9Broadcom(NASDAQ: AVGO)$365 billion
10NXP Semiconductors(NASDAQ: NXPI)$56 billion

Data source for market caps: Google Finance. Chart by author.

I was sorely tempted to give Taiwan Semi a higher spot on the list. The company definitely has a rock-solid business. However, the lingering threat to Taiwan from China and the stock's premium valuation give me some pause.

Fogies and frozen

I've nicknamed the last six tech stocks that Buffett owns "fogies and frozen." Why? Let's first look at the stocks.

RankStockMarket Cap
11Cisco Systems(NASDAQ: CSCO)$217 billion
12IBM(NYSE: IBM)$132 billion
13VeriSign(NASDAQ: VRSN)$21 billion
14HP(NYSE: HPQ)$32 billion
15Texas Instruments(NASDAQ: TXN)$156 billion
16Activision Blizzard(NASDAQ: ATVI)$72 billion

Data source for market caps: Google Finance. Chart by author.

The "fogies" are the technology companies that have been around for a long time. IBM, HP, and Texas Instruments clearly qualify. Cisco and VeriSign haven't been in business nearly as long, with the former founded in 1984 and the latter in 1995. However, 28 or more years amounts to eons in the tech world. They're all ranked, by the way, based on my expectations of their growth versus their current valuation.

Why is Activision Blizzard listed dead last? I view the stock as essentially "frozen." In other words, I don't think its share price will move very much, with its pending acquisition by Microsoft. Activision has been a huge winner for Buffett in the past, though.

Beauty is in the eye of the beholder

The old adage that "beauty is in the eye of the beholder" is applicable to tech stocks. Other investors could have much different rankings than mine. Regardless of how your list might differ from mine, I suspect we can all agree that Buffett owns some pretty good tech stocks for someone who has been generally averse to them through the years.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet, Amazon.com, Apple, Berkshire Hathaway, and Microsoft. The Motley Fool has positions in and recommends Activision Blizzard, Alphabet, Amazon.com, Apple, Berkshire Hathaway, Cisco Systems, HP, Microsoft, Qualcomm, Snowflake, StoneCo, Taiwan Semiconductor Manufacturing, Texas Instruments, and VeriSign. The Motley Fool recommends Broadcom, International Business Machines, and NXP Semiconductors. The Motley Fool has a disclosure policy.

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