Apple & Co.: Warren Buffett counts on these three AI stocks

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Warren Buffett and his partner at Berkshire Hathaway, Charlie Munger, are notorious for not being big fans of tech stocks. The main argument of the two investment myths is that the business models of these tech-heavy companies are very complex. “If there’s too much technology, we probably won’t understand it in most cases,” Buffett said after asking a question on Berkshire’s annual balance sheet a few years ago.

But over the past decade Berkshire has built three technology companies that will benefit from the future explosion in artificial intelligence (AI) applications.

Apple is still Berkshire’s largest tech conglomerate. “Apple is different from other companies we invest in. “It’s just a better company,” Buffett said at Berkshire’s last annual meeting in Omaha, Nebraska.

Berkshire invested $1 billion in Apple in May 2016, raising that stake to $151 billion by March 2023. Apple currently accounts for 46 percent, nearly half of its $328 billion stock portfolio.

Microsoft was the first

However, many market commentators wonder where this “iBot” of Apple is located. Unlike Apple, Microsoft became the first major tech company to jump on the AI ​​train, investing 10 billion in OpenAI, the developer of ChatGPT. Apple, on the other hand, appears to be pursuing a different strategy, less ostentatious than Microsoft’s ChatGPT or Google’s Bard.

Much of Apple’s AI work is currently focused on improving the day-to-day experience of its products. For example, existing camera improvements, such as photo style and the ability to extract motifs from a photo, are based on software enhancements with artificial intelligence.

But a closer look shows that Apple is working on artificial intelligence on a large scale. In an article by Bloomberg, the self-driving car is a massive AI project, and the headset uses AI to create realistic avatars and to vividly represent the user’s environment. Apple’s new headset was presented to the public on Monday evening.

It’s surprising that Apple CEO Tim Cook hasn’t commented much on productive artificial intelligence, the technology behind ChatGPT. “The potential is certainly very interesting,” Cook said in the company’s latest quarterly revenue announcement. While Apple didn’t comment on product roadmaps, it said “it’s very important to be deliberate and thoughtful about how we approach these issues.”

Numerous reports indicate that the company is seeking experts in productive AI. Given Apple’s privacy trend, there’s probably more going on behind the scenes.

An e-commerce and cloud pioneer

While Buffett did not initiate the acquisition himself, Berkshire owns a sizable stake in Amazon. This share, just over 10 million, corresponds to 1.21% in the e-commerce service provider. The current value of this holding is currently around $1.2 billion.

Amazon has long used artificial intelligence to provide users with personalized product recommendations, plan inventory, and support expedited shipping as well as comprehensive fulfillment and logistics operations. The company has been offering artificial intelligence and machine learning through its cloud computing operation, Amazon Web Services (AWS), since mid-April.

Retail companies have the opportunity to improve their customer service using artificial intelligence (AI) chatbots. “These chatbots from AWS are helping to understand and better analyze human speech,” Amazon writes. At the launch of the service, Amazon CEO Andy Jassy said that businesses can improve response times, create a better customer experience, and increase operational efficiencies by applying these AI chatbots to websites.

«Snowflake» investment in the middle

Data warehouse and analytics specialist Snowflake rounds out three of Berkshire Hathaway’s largest AI assets. The investment firm owns more than 6 million shares valued at more than one billion US dollars. One of the main reasons for the investment is that insurance companies, in which Berkshire Hathaway has held shares for decades, use Snowflake’s services to store and analyze data in different locations.

It seems doubtful whether the time is right to chase the AI ​​and technology rally on Wall Street. According to the Bloomberg consensus, Apple has the potential to rise from $175 to $183 in the next twelve months, Amazon’s $124 to $137 and Snowflake from $175 to $183.

These price targets look modest over a 12-month period. Once again, the “buy at the bottom” strategy will likely take its place. Investors with a long-term perspective buy shares when the stock is consolidated or listed lower for other reasons. This reduces the risk of buying close to the high.

Source :Blick