Apple remains Buffett’s biggest public stock holding, but his thesis about its moat faces questions
Tim Cook and Warren Buffett
Getty Images (L) | CNBC (R)
Berkshire Hathaway‘s Warren Buffett was still using a flip phone as late as 2020, four years after his investment behemoth started amassing a huge stake in the company that makes iPhones.
“I don’t understand the phone at all, but I do understand consumer behavior,” Buffett said last year at Berkshire’s annual shareholder meeting in Omaha, Nebraska.
He’s emerged in recent years as one of Apple’s top evangelists.
At the end of 2023, Berkshire owned about 6% of Apple, a stake worth $174 billion at the time, or about 40% of Berkshire’s total value. That’s about four times bigger than Berkshire’s second-biggest public stock holding, Bank of America, and makes Berkshire the No. 2 Apple shareholder, behind only Vanguard.
As Berkshire investors and fanboys of the 93-year-old Buffett flood Omaha this weekend for the 2024 annual meeting, Apple is likely to be a hot topic of discussion. The tech giant on Thursday reported a 10% year-over-year decline in iPhone sales, leading to a 4% drop in total revenue. But the stock had its best day since late 2022 on Friday due largely to a $110 billion stock buyback plan and increased margins that result from a growing services business.
The bet on Apple and CEO Tim Cook, has paid off handsomely for Buffett, who said in 2022 that the cost of Berkshire’s Apple stake was only $31 billion. His firm is up almost 620% on its investment since the start of 2016.
Despite being a self-described luddite, Buffett has long had a coherent non-techie thesis for loving Apple. He’s seen how devoted Apple users are to their devices, and has viewed the iPhone as an extraordinary product that could keep its customers spending inside the Apple ecosystem. He calls it a moat, one of his favorite words for describing his preferred businesses.
“Apple has a position with consumers that they’re paying $1,500 or whatever it may be for a phone, and these same people pay $35,000 for a second car,” Buffett said at last year’s meeting. “And if they had to give up their second car or give up their iPhone, they’d give up their second car!”
Data is in his favor. According to a study from Consumer Intelligence Research Partners, Apple has 94% customer loyalty, meaning that nine out of 10 current U.S. iPhone owners choose another iPhone when buying a new device.
Buffett has also hailed Apple’s ability to return billions of dollars to shareholders annually through share buybacks and dividends, a capital allocation strategy for which Buffett may have himself to thank. When asked in a 2016 interview with The Washington Post who he turns to for advice at pivotal moments, Cook offered up a story about his relationship with Buffett.
“When I was going through [the question of] what should we do on returning cash to shareholders, I thought who could really give us great advice here? Who wouldn’t have a bias?” Cook said. “So I called up Warren Buffett. I thought he’s the natural person.”
Apple has shown its appreciation for the Oracle of Omaha in other ways.
In 2019, the company published an original iPhone game called “Warren Buffett’s Paper Wizard” in which a paperboy bikes from Omaha to Apple’s hometown of Cupertino, California.
But with Apple’s business having declined in size in five of the past six quarters and with the company expecting just low-single digit growth in the current quarter, Buffett may face questions this weekend about whether he still sees the same power in the moat, particularly with regulatory pressures building around tech’s megacap companies.
Buffett trimmed his stake in Apple late year, though only by about 1%. Even after Friday’s rally, the stock is down 3.8% in 2024, while the S&P 500 is up 7.5%.
‘Very, very, very locked in’
Berkshire’s initial foray into Apple in 2016 was not Buffett’s idea. Rather, the investment was led by Ted Weschler, one of Buffett’s top deputies, and was seen as a passing of the torch to the next generation of Berskhire investment mangers.
But the following year, Berkshire started purchasing even more Apple, and Buffett began talking it up. He said he liked the stock and the company’s “sticky” product, although he didn’t use it.
In 2018, he said Apple users are “very, very, very locked in, at least psychologically and mentally” to the product and the ecosystem.
“Apple has an extraordinary consumer franchise,” he said.
At last year’s annual meeting, when asked how Berkshire can defend having Apple make up so much of its public portfolio, Buffett said, “It just happens to be a better business than any we own.” He also hailed Cook, calling him one of the “best managers in the world.”
A number Apple likes to use to tout the health of its business, despite the declining revenue, is 2.2 billion. That’s how many devices the company says are currently in use and points to the massive customer base available as Apple rolls out new subscription services.
“Once customers get into the ecosystem, they don’t leave. So it’s not a a speculative tech play,” said Dan Eye, chief investment officer at Fort Pitt Capital Group, which owns Apple shares. “It’s kind of more like an annuity and I think that’s what Warren Buffett really sees as well.”
In addition to the drop in revenue, Apple faces new challenges from regulations and weak overseas markets, as well as from Microsoft and Google’s advancements in artificial intelligence. For regulators, the concern surrounds the very moat that Buffett finds so attractive, and whether its give the company monopolistic control in the smartphone market.
The U.S. government in March alleged that Apple designs its business to keep customers locked in. The Justice Department’s lawsuit claimed that products like Apple Card, the Apple Arcade game subscription, iMessage, and Apple Watch work best or only with an iPhone, creating illegal barriers to competition and making it harder for consumers to switch when it’s time for an upgrade.
However, the litigation is expected to take years, pushing any potential penalties to Apple and its products well into the future. In the meantime, there’s no sign that the iPhone is becoming less important as new devices like virtual reality goggles have found only niche audiences, while consumer AI products have failed to take off.
Buffett hasn’t voiced his view publicly on Apple’s regulatory hurdles, and this will be the first opportunity for investors to ask him about the issue since the DOJ’s lawsuit. But Buffett knows a little something about regulation — two markets where he’s most active are railroads and insurance.
In a note to clients earlier this month, Bernstein analyst Toni Sacconaghi didn’t go deep on regulatory concerns, but mentioned that he doesn’t believe the DOJ suit will “seriously threaten” the strength of Apple’s ecosystem. He also said that following Buffett’s lead on getting in and out of Apple is a solid strategy for making money.
“Despite his reputation as a long term buy and hold investor, Warren Buffett has been remarkably disciplined at adding to his Apple position when it is relatively cheap and trimming when it is relatively expensive,” Sacconaghi wrote. He encouraged investors to “be like Buffett.”
More money back
Odds are that Buffett was thrilled with Apple’s announcement this week regarding its expanded repurchase program. It’s a practice he’s long adored.
“When I buy Apple, I know that Apple is going to repurchase a lot of shares,” he said in 2018.
And he likes to note how buybacks result in getting a bigger stake in the company without buying more shares.
“The math of repurchases grinds away slowly, but can be powerful over time,” Buffett said in 2021.
Apple also increased its dividend by 4%, and signaled that it would continue to lift it annually.
Buffett was effusive about Apple’s capital return strategy at the company’s annual meeting last year, pointing out that it helped Berkshire own a bigger piece of the pie. Unlike insurance company Geico and homebuilder Clayton Homes, which his firm owns in their entirety, Berkshire can continue to increase its stake in Apple, a fact he reminded investors of at the meeting.
“The good thing about Apple is that we can go up,” Buffett said.
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Alex Karp, chief executive officer of Palantir Technologies Inc., speaks during the AIPCon conference in Palo Alto, California, US, on March 13, 2025.
David Paul Morris | Bloomberg | Getty Images
Tech stocks have struggled in 2025, as recession and trade war fears sap investor appetite for riskier assets.
Palantir is the exception.
Against a volatile market backdrop, the software maker’s stock has gained 45% and is the best performer among companies valued at $5 billion or more, according to FactSet. The closest tech names are VeriSign, up 33%, Okta, up 30%, Robinhood, up 29%, and Uber, up 29%.
President Donald Trump‘s frenzy of government department overhauls is partially to thank for the pop.
“When you think about macroeconomic concerns, you as a company need to be more efficient, and this is where Palantir thrives,” said Bank of America analyst Mariana Pérez Mora.
Palantir has set itself apart in the software world for its artificial-intelligence-enabled tools, gaining recognition for its defense and software contracts with key U.S. government agencies, including the military. In the fourth quarter, its government revenues jumped 45% year-over-year to $343 million.
Companies have faced immense volatility in 2025 as tariffs threaten to jeopardize global supply chains and halt day-to-day manufacturing operations by hiking costs. Those fears have brought the broad market index down about 7% this year, while the tech-heavy Nasdaq Composite has slumped 11%.
Tech’s megacap companies — Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla — are all down between 7% and 31% so far this year.
At the same time, the Trump administration has clamped down on government spending, giving Tesla CEO Elon Musk‘s Department of Government Efficiency freedom to slash public sector costs. Some administration officials have touted shifting dollars from consulting contracts to commercial software providers like Palantir, said William Blair analyst Louie DiPalma.
“Palantir’s business model is highly aligned with the priorities of the Trump administration in terms of increasing agility and being very quick to market,” he said.
That’s put Palantir in the league with major contractors such as Lockheed Martin and Northrop Grumman, which have outperformed in this year’s downdraft. Many companies in the space are also looking to partner with the firm and tend to flock to defense during recessionary times, DiPalma said.
Palantir vs. the Nasdaq Composite
CEO Alex Karp has also been a vocal supporter of American innovation and the company’s central role in helping prop up what he called the “single best tech scene in the world” during an interview with CNBC earlier this year. Karp also told CNBC that the U.S. needs an “all-country effort” to compete against emerging adversaries.
But the ride for Palantir has been far from smooth, and shares have been susceptible to volatile swings. Shares sold off nearly 14% during the week that Trump first announced tariffs. Shares rocketed 22% one day in February on strong earnings.
Its inclusion in more passive and quant funds over the years and the growing attention of retail traders has added to that turbulence, DiPalma said. Last year, the company joined both the S&P and Nasdaq. Palantir trades at one of the highest price-to-earnings multiples in software and last traded at 185 times earnings over the next twelve months. That puts a steep bar on the stock.
“There really is no margin for error,” he said.
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Kurt Sievers, chief executive officer of NXP Semiconductors NV, during the Federation of German Industries (BDI) conference in Berlin, Germany, on Monday, June 19, 2023.
Liesa Johannssen-Koppitz | Bloomberg | Getty Images
NXP Semiconductor Inc. fell about 8% on Monday after the chip company announced that CEO Kurt Sievers will step down as part of its latest earnings.
Here’s how the company did, versus LSEG consensus estimates:
- Earnings per share: $2.64 adjusted vs. $2.58 expected
- Revenue: $2.84 billion vs. $2.83 billion expected
Sievers will retire at the end of the year, with Rafael Sotomayor stepping in as president on April 28, 2025.
The company beat expectations on the top and bottom lines but cited a “challenging set of market conditions” looking forward.
“We are operating in a very uncertain environment influenced by tariffs with volatile direct and indirect effects,” Sievers said in an earnings release.
Sales in NXP’s first quarter declined 9% year over year.
The company posted $1.67 billion in auto sales during the first quarter, trailing analyst estimates of $1.69 billion.
NXP Semi said that second-quarter sales would come in at a midpoint of $2.9 billion, ahead of the $2.87 billion that analysts were projecting. Second-quarter adjusted EPS will be $2.66, in line with analyst estimates.
The company logged first-quarter net income of $490 million, which was a 23% year-to-year drop from $639 million.
NXP’s net income per share was $1.92 compared to $2.47 during the same time a year ago. A drop of 22%.
This is breaking news. Please refresh for updates.
Microsoft President Brad Smith speaks during signing ceremony of cooperation agreement between the Polish Ministry of Defence and Microsoft, in Warsaw, Poland, February 17, 2025.
Kacper Pempel | Reuters
The U.S. cannot afford to fall behind China in the race to a working quantum computer, Microsoft President Brad Smith wrote Monday.
President Donald Trump and the U.S. government need to prioritize funding for quantum research, or China could surpass the U.S., endangering economic competitiveness and security, Smith wrote.
“While most believe that the United States still holds the lead position, we cannot afford to rule out the possibility of a strategic surprise or that China may already be at parity with the United States,” Smith wrote. “Simply put, the United States cannot afford to fall behind, or worse, lose the race entirely.”
Microsoft’s position is the latest sign that research into quantum computing is starting to heat up among big tech companies and investors who are looking for the next technology that could rival the artificial intelligence boom.
Smith is calling for the Trump administration to increase funding for quantum research, renew the National Quantum Initiative Act and expand a program for testing quantum computers by the Defense Advanced Research Projects Agency, or DARPA. The Microsoft executive is also calling on the White House to expand the educational pipeline of people who have the math and science skills to work on quantum machines, fast-track immigration for Ph.D.s with quantum skills and for the government to buy more quantum-related computer parts to build a U.S. supply chain.
Microsoft did not detail how China surpassing the U.S. in quantum computing technology would endanger national security, but a National Security Agency official last year discussed what could happen if China or another adversary surprised the U.S. by building a quantum computer first.
The official, NSA Director of Research Gil Herrera, said that if such a “black swan” event happened, banks might not be able to keep transactions private because a quantum computer could crack their encryption, according to the Washington Times. A working quantum computer could also crack existing encrypted data that is usually shared publicly in a scrambled fashion, which could reveal secrets on U.S. nuclear weapon systems.
In February, Microsoft announced its latest quantum chip called Majorana, claiming that it invented a new kind of matter to develop the prototype device. Last year, Google announced Willow, a new device the company claimed was a “milestone” because it was able to correct errors and solve a math problem in five minutes that would have taken longer than the age of the universe on a traditional computer.
While the computers people are used to use bits that are either 0 or 1 to do calculations, quantum computers use “qubits,” which end up being on or off based on probability. Experts say that quantum computers will eventually be useful for problems with nearly infinite possibilities, such as simulating chemistry, or routing deliveries.
But the current quantum computers are far away from that point, and many computer industry participants say it could take decades for quantum computers to reach their potential.
Microsoft’s chip, Majorana, has eight qubits, but the company says it has a goal of least 1 million qubits for a commercially useful chip. Microsoft needs to build a device with a few hundred qubits before the company starts looking at whether it’s reliable enough for customers.
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