32.1% of Warren Buffett's $295 Billion Portfolio Is Invested in 4 Artificial Intelligence (AI) Stocks
Had you invested $1,000 in Berkshire Hathaway (BRK.A -1.57%) (BRK.B -1.72%) when Warren Buffett became its CEO in 1965, you would have $42.5 million today. The same investment in the S&P 500 would have grown to just $343,000 over the same period, which highlights Buffett’s incredible ability to pick stocks.
You won’t ever find Buffett chasing the latest stock market trends, not even one as powerful as artificial intelligence (AI). However, four existing holdings in Berkshire’s $297 billion portfolio of publicly traded securities are using AI to supercharge their legacy businesses.
Image source: The Motley Fool.
1. Domino’s Pizza: 0.2% of Berkshire Hathaway’s portfolio
Berkshire bought shares in Domino’s Pizza (DPZ 0.30%) during the third quarter of 2024 (ended Sept. 30), so it’s a relatively new addition to the portfolio. It’s the world’s largest pizza chain, serving over 1 million customers per day from its 21,000 stores across 90 countries.
Domino’s uses technology extensively to improve efficiency, which translates into lower costs and higher profits. The company has deployed an AI algorithm to identify patterns in customer behavior, so it knows when to start making pizzas — even before an order is officially completed on its website. That means customers receive their food faster than ever.
Eventually, Domino’s wants AI to handle everything from inventory management to staff scheduling, so this is just the beginning of a technological revolution at the company.
Winning the approval of Buffett and his team wasn’t easy last year, because Berkshire was a net seller of stocks overall. Domino’s was one of just five new additions to the conglomerate’s portfolio, which might be a very bullish sign for the pizza giant.
2. Amazon: 0.8% of Berkshire Hathaway’s portfolio
Amazon (AMZN 1.86%) is the world’s largest e-commerce company. It also dominates the cloud computing industry, and it has a growing presence in digital advertising and streaming. AI isn’t just a tool for Amazon, it’s going to be a core part of its entire organization.
The company already uses AI in its recommendation engine to show customers products they are likely to buy. And it developed an AI assistant called Rufus to help customers with their purchase decisions.
Even Amazon’s fulfillment centers rely on AI — aside from the fleets of autonomous robots, a new technology called Project Private Investigator uses AI and computer vision to identify defective products before they are shipped to customers.
Then there is the Amazon Web Services (AWS) cloud platform, which is becoming a preferred destination for developers looking to build AI software. AWS is working to dominate the three core layers of AI cloud services: infrastructure (data centers and chips), large language models (LLMs), and software.
During the third quarter of 2024, management said AI revenue within AWS grew by a triple-digit percentage year over year, and it’s currently growing three times faster than the cloud business did at the same stage of its life cycle.
Berkshire bought Amazon stock in 2019, but Buffett has often expressed regret for not identifying the company’s potential much sooner. Nevertheless, his company’s position is worth over $2.3 billion, so Berkshire stands to make a substantial amount of money if Amazon remains a leader in the AI race.
3. Coca-Cola: 8.4% of Berkshire Hathaway’s portfolio
Coca-Cola (KO -1.02%) is the world’s largest beverage company, with people in 200 countries consuming 1.9 billion servings of its drinks every day. Achieving that level of scale wouldn’t be possible without technology, and Coca-Cola is staying true to its history as an innovator by investing heavily in AI.
In April 2024, the company made a commitment to spend $1.1 billion over five years on Microsoft‘s Azure cloud platform, where it will access a portfolio of AI services to improve its supply chains, productivity, and marketing.
Speaking of marketing, Coca-Cola has already used AI in several campaigns. It launched Create Real Magic during the recent holiday period, which allowed users to generate holiday-themed digital snow globes on the company’s website.
Prior to that, it used AI to create a promotional version of its flagship soda called Coca-Cola Y3000, which captured what the drink could taste like in the year 3000 based on mountains of data from customers.
Berkshire acquired 400 million shares of Coke between 1988 and 1994, at a total cost of $1.3 billion. It never sold a single share, and today, that stake is worth over $25 billion. Buffett probably never anticipated AI would become such a big part of Coca-Cola’s future, but Berkshire will benefit from the value it creates, nonetheless.
4. Apple: 22.7% of Berkshire Hathaway’s portfolio
Apple (AAPL 0.53%) accounted for around 50% of the total value of Berkshire’s portfolio at the beginning of 2024, but Buffett and his team decided to take some of the conglomerate’s profits by selling over half of the position. Apple remains Berkshire’s largest holding, though, with a 22.7% weighting in its portfolio.
Management has been preparing for the AI revolution for a while. Its strategy began with hardware, because the company had to design new chips and components for its latest iPhones, iPads, and Mac computers that were powerful enough to support the technology. With those now in place, the company was able to launch its Apple Intelligence software last year, which introduced swathes of new AI features.
These include new writing tools that empower users to quickly summarize email and text messages and then generate outgoing replies. Apple Intelligence can also prioritize notifications for users based on their preferences, saving them time. Even the Siri voice assistant received a makeover, because it now taps into the knowledge and capabilities of OpenAI‘s ChatGPT.
There are more than 2.2 billion active Apple devices worldwide, so the company could eventually become the largest distributor of AI to consumers. Therefore, despite the selling spree last year, Berkshire could still do extremely well over the long term with its remaining stake.