Buffett Dumps More Apple

In his last quarter as CEO of Berkshire Hathaway (NYSE: BRK-B), Warren Buffett remixed his portfolio, as he always does. He cut his position in Amazon (NASDAQ: AMZN | AMZN Price Prediction) and increased his bet on Chevron. He also did something he has done for several quarters. He cut his position in Apple (NASDAQ: AAPL) sharply,

According to Bloomberg, “Also in the fourth quarter, Berkshire continued trimming its stakes in Bank of America Corp. and Apple Inc., bringing them to 7.1% and 1.5%, respectively.” He first bought Apple in 2016.

Like many of the world’s largest investors, Buffett does not always provide a rationale for buying or selling a stock.

One could make an educated guess about his move. Apple shares have increased by 8% over the past year. The S&P is 12% higher. By contrast, shares of Alphabet are up 62% over the same period

It is clear that the iPhone continues to carry Apple on its broad shoulders. In the most recent quarter, iPhone sales were 60% of Apple’s $144 billion in revenue. And, iPhone revenue was also up 23% year over year. The worry that it did not launch its new operating system late last year or early this year barely seemed to matter.

However, anyone who follows Apple can see it has been left out of the race to lead the AI industry. Massive investments are being made by Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOG), OpenAI, and numerous large public and private companies. Many of Apple’s lead AI engineers were recruited by competitors.

Apple’s move into AI is to license Google Gemini and integrate it into Siri. Reuters made the point that, “The latest agreement builds on a years-long partnership that makes Google the default search engine on Apple devices – a lucrative arrangement that drives traffic for Google while generating tens of billions in annual revenue for Apple.”

The Apple decision is the clearest indication yet that it has given up on being a leader in AI. It also means Apple will not spend hundreds of billions of dollars to be in the sector.

Did Buffett see that Apple dropped out of the AI race, and worry about it? There is a chance no one will ever know.