Warren Buffett Is Selling His Apple Stocks for Cash — Should You Do the Same?

Warren Buffett has been on a selling spree and recently trimmed his two biggest holdings: Apple and Bank of America. Buffett caught many investors by surprise when he trimmed his Apple position, as the company used to represent roughly half of his portfolio.

Berkshire sold 25% of its Apple stake over the summer and more than half of its entire position over the past few quarters.

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Is the Oracle of Omaha onto something, or are his recent Apple stock transactions misguided?

Here’s what you should consider before deciding if you should sell Apple or hold onto your shares.

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The Financial Reports Haven’t Been Good Lately

A key area of contention in recent quarters has been Apple’s slow growth. Apple delivered 6% year-over-year revenue growth in quarter three of 2024 while net income dropped by 36% year-over-year. The company still closed the quarter with a respectable 15.5% net profit margin, but the company has regularly reported profit margins above 25%.

The main issue is that Apple makes roughly half of its revenue from the iPhone. It has become more difficult for Apple to innovate on this product, and that’s part of the reason why growth has decelerated over the years. iPhone revenue grew by 5.5% year-over-year.

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Artificial Intelligence Can Bring More Life to the Stock

While the stock’s gains have outpaced net income growth for several years, artificial intelligence (AI) can reignite Apple’s financial growth. It would come at a good time, and investors are starting to see that come to fruition.

AI features have boosted demand for the new iPhone. Full-year iPhone sales are up by less than 1% year-over-year. Results from quarter three of 2024 represent a meaningful growth acceleration from the full fiscal year. Additional growth can help Apple’s iPhone sales get close to a 10% year-over-year growth rate, which would be great news for the stock.

Artificial intelligence isn’t only going to help the iPhone. Apple Services is the company’s fastest-growing segment, and it stands to benefit nicely from AI features. Services revenue increased by 12% year-over-year and now makes up more than a quarter of the company’s total revenue.

If Apple Services revenue growth remains strong and iPhone growth accelerates, Apple can soon return to double-digit growth rates.

Apple Has Immense Brand Loyalty

Apple isn’t just a company that sells hardware. It’s developed a loyal fanbase of consumers who regularly buy Apple products. Apple products have become status symbols, similar to Louis Vuitton handbags. Customers have also been conditioned to view Apple as an innovative company that offers top-tier products and services.

This type of loyalty gives Apple more leeway when it makes mistakes. The company can also generate more excitement when it releases innovative products and features. Apple Services gives the company an opportunity to tap into brand loyalty and increase the average value per customer.

Understand What Apple Stock Is and Isn’t

Setting expectations around Apple stock can help you decide if it makes sense to sell your shares or hold onto them. Apple shares have not outperformed the S&P 500 year-to-date, and that can be a trend if artificial intelligence initiatives don’t generate enough sales growth.

Investors with higher risk tolerances who want to outperform the stock market should consider other growth stocks.

However, recent revenue growth rates suggest that there are better days ahead. Apple isn’t dead money at this stage, and it can still deliver annualized double-digit returns for investors. Shares have more than tripled over the past five years, and while Apple is unlikely to repeat that performance, it still presents long-term opportunities for patient investors.

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