Warren Buffett is the CEO of the Berkshire Hathaway (BRK.A 0.13%) (BRK.B -0.06%) holding company, where he oversees a $281 billion portfolio of publicly traded stocks and securities, in addition to several privately held subsidiaries. Berkshire is also sitting on a record $334 billion in cash, which Buffett and his team can deploy when they spot new opportunities.
Had you invested $1,000 in Berkshire stock when Buffett took the helm in 1965, it would be worth an eye-popping $44.7 million today. The same investment in the S&P 500 would have grown to just $342,906 over the same period, which highlights Buffett's spectacular ability to pick stocks.
Buffett is a long-term value investor who often holds stocks for decades, so you won't find him chasing the latest market trends, not even those as powerful as artificial intelligence (AI). However, at least three existing holdings in Berkshire's portfolio are using AI to enhance their legacy businesses.
Amazon (AMZN 1.17%) is the largest e-commerce company in the world, but investors are more focused on its cloud computing platform, Amazon Web Services (AWS), which is where businesses can access a growing portfolio of AI services. In fact, AWS wants to dominate the three core layers of this revolutionary technology:
Amazon's use of AI doesn't stop at AWS. It developed an AI shopping assistant called Rufus for amazon.com, which helps customers compare products and make smarter purchases. Sellers on Amazon can also use AI to create product pages and advertisements, ensuring their content is engaging for customers, and easily discovered by the website's search engine.
AWS is coming off a record year, generating $107.5 billion in revenue during 2024. Although that accounted for just 16.8% of Amazon's total revenue of $637.9 billion, the cloud platform was responsible for more than half of the conglomerate's $68.6 billion in operating income. In other words, AWS is the profit engine behind the entire organization.
Berkshire bought Amazon stock in 2019, and the position represents just 0.7% of its portfolio. However, in the past, Buffett said he wished he identified the opportunity much sooner. Nonetheless, Berkshire's position is worth almost $2 billion, so it could still earn a significant return if Amazon's AI bets pay off.
Coca-Cola (KO -1.55%) is the world's largest beverage company, but believe it or not, it takes more than tasty sodas to reach this level of success. Coca-Cola invests heavily in technology to drive efficiency and extract the maximum amount of revenue from its products, and the company is now betting big on AI.
The beverage giant has already used AI in several marketing campaigns. It leaned on AI models to predict what Coca-Cola might taste like in the year 3000 based on mountains of customer data, and then formulated a new promotional beverage called Coca-Cola Y3000. Moreover, the company used AI in a Christmas-themed campaign last year called Create Real Magic, which enabled customers to generate digital snowglobes via its website using prompts.
In April 2024, Coca-Cola also committed to spend $1.1 billion over five years on Microsoft's Azure cloud platform, which offers a growing portfolio of AI services. Coca-Cola will use those tools to enhance its marketing, productivity, and supply chains.
Berkshire owns 400 million shares of Coca-Cola, which it acquired between 1988 and 1994. The position cost Berkshire $1.3 billion in total, and today, it's worth a whopping $28.8 billion. The conglomerate also earned $776 million in dividends in 2024 -- in other words, it doubles its initial investment every two years just in dividend payments alone!
AI certainly wasn't a factor in Buffett's decision to buy Coca-Cola stock three decades ago, but the technology could help compound his future returns nonetheless.
Berkshire spent around $38 billion acquiring shares of Apple (AAPL -1.75%) between 2016 and 2023. Heading into 2024, that position was worth over $170 billion, meaning the conglomerate was sitting on a substantial profit. As a result, Buffett and his team took some money off the table last year, selling more than half of Berkshire's stake in the iPhone maker.
Apple is still the largest position in Berkshire's portfolio, which might be a good thing considering the company's progress in the AI space. It recently launched its Apple Intelligence software for the latest iPhones, iPads, and Mac computers, which introduced a slate of new tools to transform the way users create and consume content, manage their notifications, and interact with their apps. Since Apple Intelligence was developed in partnership with OpenAI, the Siri voice assistant also received a big upgrade because it now borrows its knowledge from ChatGPT.
Since there are more than 2.2 billion active Apple devices worldwide, this company is likely to become the largest distributor of AI to consumers one day. Plus, the company has a unique advantage because it designs its own chips, and they are some of the most powerful in the world for both traditional and AI workloads. It recently launched a new series of MacBooks with its M4 chip, and also the iPhone 16 which features the A18 Pro smartphone chip -- both of which were designed to handle the growing demand for computing power from AI software.
Since Berkshire is still holding over $68 billion worth of Apple stock, it stands to do extremely well if Apple's move into AI creates a new wave of demand for its latest devices, and its portfolio of software services.
