Berkshire Hathaway’s portfolio has at least three major tech stocks that are benefiting from AI.
All three of these juggernauts have excellent prospects beyond their AI-related work.
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Warren Buffett, often considered the greatest investor of all time, has historically been cautious about investing in technology companies. However, whether it was his work or due to the influence of some of his lieutenants to invest, Berkshire Hathaway‘s (NYSE: BRK.A)(NYSE: BRK.B) portfolio has several technology stocks, or at least those related to technology. Some of them are notable players in the growing field of artificial intelligence (AI) as well, and can deliver excellent long-term returns as they capitalize on this huge opportunity. Three stocks in the conglomerate’s portfolio, in particular, Apple(NASDAQ: AAPL), Amazon(NASDAQ: AMZN)and Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL)they seem to be excellent AI stocks to buy.
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Although Berkshire Hathaway has sold Apple shares on several occasions in recent years, the iPhone maker remains the conglomerate’s largest holding. And although Apple is perceived as lagging behind some of its similarly sized tech peers in AI, the company is making slow but steady progress in that department. Apple has added even more AI features to its latest iPhone, the 17, which is seeing strong demand. Management believes AI features are part of the reason.
The iPhone 17 and the previous 16 are suffering from supply restrictions, which prevent Apple from meeting the high demand for these models. Over the coming years, the company should see a strong renewal cycle, which will help boost sales.
Meanwhile, Apple is significantly increasing its AI-related investments. Apple is likely still in the early stages of its AI strategy and will capitalize on its large installed base to further strengthen its ecosystem by adding a large number of AI features to its devices. And as it does, the company’s hardware business, particularly the iPhone, should continue to be a decent engine for growth. In addition, Apple’s services segment will also continue to make progress.
This long-term, high-margin opportunity will help boost profits as Apple’s billion-plus subscriptions continue to grow. All these factors make Apple’s prospects attractive and an excellent AI stock to buy and hold on to for a while.
Amazon has become a leading provider of AI services. Through its market-leading Amazon Web Services (AWS), the tech giant offers products such as SageMaker, a service that helps companies build and train machine learning models. Perhaps Amazon’s best-known AI offering is Bedrock, through which it provides access to a library of generative AI models, including some of the market leaders. Amazon is also using internal AI to improve efficiency and productivity.
The army of industrial robots in Amazon’s warehouses now uses AI assistance to optimize travel routes. This aligns with Amazon’s relentless focus on customer service, as it helps expedite shipments to customers even faster. These initiatives are expected to continue to have a positive impact on the company’s financial results.
Amazon’s cloud computing business is doing very well and has recently achieved sales growth of the kind not seen in years. Meanwhile, Amazon’s robot-related efforts should help cut costs and increase margins in its e-commerce business. The best part is that these are long-term opportunities for the company, and it boasts a strong economic moat thanks to switching costs within its AWS division and strong network effects for its e-commerce business. All these factors make it the best AI stock to buy and hold.
Alphabet is new to Berkshire Hathaway’s portfolio, with the conglomerate starting a position for the first time during the third quarter. The online search leader is also establishing itself as a leader in AI, although at first, many thought that the addition of chatbots would disrupt its search empire; however, adapted thanks to AI. Alphabet’s AI overviews and AI mode are getting a big hit. Alphabet also offers access to a variety of AI services through the cloud, which is helping that segment — already the company’s fastest growing — expand even faster.
Meanwhile, the company recently launched its newest AI model, Gemini 3, which it says is the best one yet. It is clear that Alphabet is benefiting from AI, and is not seeing its business decline because of it, as some have predicted. And there’s more to come, as the company continues to innovate. It adds to the long list of growth drivers it boasts, which also include its streaming ambitions through YouTube and a large and growing number of Google subscriptions. Berkshire Hathaway was right to start a position in this excellent AI stock.
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Prosper Junior Bakiny holds positions in Alphabet, Amazon, and Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
25% of Warren Buffett’s Portfolio Is Invested in These 3 Unstoppable AI Stocks was originally published by The Motley Fool
