One thing I’ve always admired about Warren Buffett, outgoing CEO of Berkshire Hathaway, is that throughout his remarkable career, he has consistently adhered to his core investing principles without becoming entrenched in his old ways. Buffett and his team have never been afraid to invest in newer sectors.
While Berkshire isn’t buying pure artificial intelligence stocks, the company (at the direction of Buffett) has purchased several stocks in the “Magnificent Seven” during a time when many investors are concerned about the sheer size of these companies and their dominance of the broader market. In fact, nearly 24% of Berkshire’s massive, roughly $305 billion equities portfolio is invested in just these three stocks.
Image source: Getty Images.
Berkshire first invested in consumer tech giant Apple(NASDAQ: AAPL) in 2016 and at one point had grown the position to roughly 40% of Berkshire’s portfolio. Buffett supposedly first got interested in the position after seeing how devastated one of his friends was after losing their iPhone.
Apple has many of the characteristics that Buffett typically looks for in a stock: a rock-solid moat, a strong brand, tremendous earnings power, and it has repurchased a lot of stock over the years.
While a part of the Magnificent Seven, many investors have been concerned about Apple’s AI strategy. But at some point, the company is likely to become a tremendous beneficiary of the technology, at the very least as it integrates AI features into its consumer products.
While Apple is still Berkshire’s largest position, Berkshire has sold 74% of its stake in the company since early 2023. Buffett and Berkshire have seemingly been very worried about the market, so it makes sense they would want to reduce their exposure to one of the biggest stocks in the market. I think it’s likely Berkshire will eventually exit the position.
Apple has actually proven to be a decent stock to own during the AI sell-off because it hasn’t invested as heavily in AI infrastructure as some of its peers, making those worried about a bubble less concerned with the company. I believe it’s a stock that investors can still hold for the long term.
Berkshire initiated a new position in Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL) during the third quarter, a stock that seemed to be a popular pick among hedge funds. Google has had a bumpy year, but ultimately seems to have emerged better. The U.S. Department of Justice (DOJ) sued the large tech conglomerate, alleging that Google employed monopolistic practices in the search and digital advertising markets to maintain its dominant position.
A federal court agreed with the DOJ, but ultimately issued a weaker punishment than most expected, essentially allowing the company to continue operating as usual. Alphabet has also been able to shake off concerns about AI chatbots, such as OpenAI’s ChatGPT, creeping into the search space, with its own innovations like Google overviews and AI mode. The company also recent released the third version of its AI model.
It’s easy to see why the smart money likes Alphabet right now. The stock trades at about 30 times forward earnings. It’s a play on AI, but also has many other strong business with strong growth potential like Google Cloud, YouTube, and Waymo, among others.
On a sum-of-the-parts valuation, I am confident that the company is worth significantly more than its current market capitalization.
Berkshire first purchased Amazon(NASDAQ: AMZN) in 2019, although the stock only makes up a small portion of Berkshire’s portfolio.
Amazon owns two phenomenal businesses. The first is the one most people interact with on a daily or weekly basis: the retail e-commerce business, where consumers can buy almost any product and have it shipped to their door in just a few days or even the very next day. The company bundles this business and other ancillary services, such as Prime Video, to sell its annual Amazon Prime subscription, which generates recurring annual revenue.
Amazon also operates a large cloud business called Amazon Web Services (AWS), which enables businesses to rent Amazon’s extensive network of servers to store their data in the cloud and utilize other tools that help them run more efficiently. In the second quarter of 2025, AWS led the global cloud market with 30% market share.
I think what many fail to understand is that even before AI, AWS still had a significant runway to convert businesses to the cloud. Naturally, though, any big cloud player is going to be a big beneficiary of AI.
Amazon trades about 32 times forward earnings, which suggests the stock is not cheap. Still, no company in the Magnificent Seven necessarily trades cheap, but plenty of investors are OK these valuations, consider the still solid growth potential these companies have for reasons related to AI as well as for their incredibly strong non-AI businesses.
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $580,171!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,084,986!*
Now, it’s worth noting Stock Advisor’s total average return is 1,004% — a market-crushing outperformance compared to 194% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
SINGAPORE (Reuters) -Thailand’s second largest lender Kasikornbank is leaning on artificial intelligence and prudent lending to navigate economic headwinds and…
