Apple Is Warren Buffett’s Largest Holding — Here’s Why

Warren Buffett’s investment company, Berkshire Hathaway, has earned legendary status for its stunning performance over several decades. Within a portfolio worth hundreds of billions of dollars spread across dozens of stocks, Apple remains Buffett’s single biggest holding.

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Apple stock accounts for around one-fourth of Berkshire Hathaway’s total equity investments, which shows Buffett’s conviction in the tech giant.

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Why Did Warren Buffet Buy Apple Stock?

Buffett first took a position in Apple in 2016, per Stockcircle. Berkshire accumulated shares at various points, capitalizing on Apple’s robust earnings and enduring brand appeal. Over time, Apple’s rising stock price pushed it from a modest investment to a central pillar of the Berkshire portfolio. The most recent 13F filing for Berkshire Hathaway places Apple at over 28% of the portfolio.

Buffett has trimmed the stake on several occasions, but Apple stock still dominates at Berkshire Hathaway. Buffet has noted, according to CNBC, that Apple isn’t just a tech company. In his view, it delivers valuable consumer products with powerful brand loyalty, which lowers the risk of holding a large block of shares. Apple’s loyal customer base keeps spending on iPhones, iPads, Apple Watches and services. That brand power has insulated the company from competitive threats that often sideline other tech firms.

Buffett also appreciates Apple’s robust cash flow and shareholder-friendly policies. Apple consistently buys back shares and pays a dividend These actions illustrate a leadership team aligned with investor interests, which is exactly the kind of corporate behavior Buffett appears to seek out. He has often praised Apple CEO Tim Cook’s strong managerial skills, viewing him as a steady hand that emphasizes long-term stability.

Another factor behind Buffett’s confidence, per CNBC, is Apple’s ecosystem advantage. Millions of people stick with Apple products once they experience the software integrations between devices. This creates a recurring stream of revenue from service subscriptions and app sales. In other words, once consumers commit to Apple’s environment, they have little desire to switch. Buffett interprets that loyalty as a wide “economic moat,” a term he uses to describe a business’s competitive protection, according to Prive Technologies.

In earlier years, Buffett mostly avoided technology stocks, asserting they were outside his circle of competence. Apple changed his mind, however, in large part because it operated more like a consumer products firm than a speculative tech startup. Its steady profits, massive cash reserves and core product lines fit Buffett’s love of established companies with durable competitive edges.

Today, Berkshire’s reliance on Apple shows up in each quarterly filing. When Apple’s stock rises, Berkshire sees its portfolio value climb significantly. The Oracle of Omaha has admitted that Apple is in a class of its own among Berkshire’s holdings. This large position comes with some risk, in theory, because concentration can amplify volatility. However, Buffett’s track record of sticking with companies he understands has yielded tremendous results over the decades.

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Should You Invest in Apple Stock?

Buffet’s long-term thinking is an important takeaway for everyday investors. His favorite holding period is famously “forever.”  Although he has sold portions of Berkshire’s Apple stake, his original thesis remains intact. He bought into Apple’s reliable earnings engine, global brand and ongoing customer loyalty. Then, he held tight when the market went through periodic downturns.

Smaller investors might choose not to mirror Berkshire’s exact portfolio, but they should adopt Buffett’s strategy of prioritizing companies with strong leadership, a clear competitive moat and a record of rewarding shareholders. Investors can look for consumer-facing giants with wide recognition and consistent demand for their products. They should also dig into cash flow, debt levels and corporate governance. Those factors often reveal whether a company can sustain its advantages.

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This article originally appeared on GOBankingRates.com: Apple Is Warren Buffett’s Largest Holding — Here’s Why