47% of Warren Buffett’s $375bn portfolio is invested in these AI stocks!
We’d all love to invest like Warren Buffett. He’s mightily successful and is among the world’s richest individuals with a net worth in excess of $100bn.
Some investors may not realise that his portfolio is relatively concentrated. In fact, 47% of his Berkshire Hathaway portfolio is invested in three American tech stocks that utilise artificial intelligence (AI) to optimise their operations.
AI has certainly emerged as an investment buzzword this year. However, let’s delve deeper into these stocks and endeavour to gain a more insightful perspective on whether they might present an attractive investment opportunity for British investors.
Investing in US stocks
Investing in US stocks opens up the chance to tap into high-growth tech companies not typically found in the UK market.
Alongside the potential for greater growth, it’s worth noting that the S&P 500 has significantly outperformed the FTSE 100 in the last five years. We can view this in two ways:
- UK stocks are undervalued. Better opportunities lie in the UK.
- Stronger investor sentiment, as seen in the US, will benefit my investments and avoid stagnation.
We can observed the underperformance of the UK blue-chip index over the aforementioned five-year period in the following chart.
However, it’s crucial to keep one important aspect in mind – currency. Values, especially the pound against the dollar, have shown significant fluctuations over the past year. If I were to invest in US stocks today and the pound were to strengthen tomorrow, it could lead to a corresponding drop in the value of my investment.
Buffett’s 47%
Currently, a substantial portion of Buffett’s managed investment portfolio at Berkshire Hathaway, totalling over $177bn (equivalent to 47% of the $375bn), is allocated to only three AI-oriented stocks. These stocks include Apple, Amazon, and Snowflake.
- Apple’s utilisation of AI goes far beyond Siri. It plays a pivotal role in crafting the upcoming generation of apps, refining autocorrection capabilities, enhancing face recognition, and perfecting voice recognition tools. These integrated AI features not only foster brand loyalty but also consistently elevate the productivity appeal of Apple’s offer.
- Amazon’s integration of AI spans across its brand. Its cloud infrastructure service division, Amazon Web Services (AWS) heavily relies on AI capabilities. Moreover, the Alexa speaker, powered by AI, commands a notable 28% share in the global smart speaker market. Additionally, Amazon’s software employs AI algorithms to guarantee that customers browsing its marketplace see products that align with their highest likelihood of purchase.
- Snowflake, a data-warehousing company, will start utilising generative AI and extensive language model technology this year.
So are these stocks right for British investors? Well, in all honesty, every investment opportunity requires considerable research into a company’s fundamentals and an assessment of its balance sheet and future credentials. Of course, for some investors, knowing Buffett owns these stocks is enough. But that might not be a wise decision.
However, it’s worth noting that none of these stocks are particularly cheap, at least compared to what we’re used to in the UK — this is evidenced by the below chart comparing price-to-earnings and price-to-sales ratios.
The post 47% of Warren Buffett’s $375bn portfolio is invested in these AI stocks! appeared first on The Motley Fool UK.
Pound coins for sale — 51 pence?
This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!
Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.
What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?
See the full investment case
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More reading
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- A rare opportunity for discerning investors to build a portfolio of cheap UK shares!
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Fox has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon.com, Apple, and Snowflake. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
