Had you invested $1,000 in Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) when Warren Buffett became its CEO in 1965, you’ll have $42.5 million today. The identical investment within the S&P 500 would have grown to only $343,000 over the identical period, which highlights Buffett’s incredible ability to select stocks.
You will not ever find Buffett chasing the most recent stock market trends, not even one as powerful as artificial intelligence (AI). Nevertheless, 4 existing holdings in Berkshire’s $297 billion portfolio of publicly traded securities are using AI to supercharge their legacy businesses.
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Berkshire bought shares in Domino’s Pizza(NASDAQ: DPZ) through the third quarter of 2024 (ended Sept. 30), so it’s a comparatively latest addition to the portfolio. It is the world’s largest pizza chain, serving over 1 million customers per day from its 21,000 stores across 90 countries.
Domino’s uses technology extensively to enhance efficiency, which translates into lower costs and better profits. The corporate has deployed an AI algorithm to discover patterns in customer behavior, so it knows when to start out making pizzas — even before an order is officially accomplished on its website. Which means customers receive their food faster than ever.
Eventually, Domino’s wants AI to handle all the things from inventory management to staff scheduling, so that is just the start of a technological revolution at the corporate.
Winning the approval of Buffett and his team wasn’t easy last 12 months, because Berkshire was a net seller of stocks overall. Domino’s was one among just five latest additions to the conglomerate’s portfolio, which could be a really bullish sign for the pizza giant.
Amazon(NASDAQ: AMZN) is the world’s largest e-commerce company. It also dominates the cloud computing industry, and it has a growing presence in digital promoting and streaming. AI is not just a tool for Amazon, it will be a core a part of its entire organization.
The corporate already uses AI in its advice engine to indicate customers products they’re more likely to buy. And it developed an AI assistant called Rufus to assist customers with their purchase decisions.
Even Amazon’s success centers depend on AI — other than the fleets of autonomous robots, a latest technology called Project Private Investigator uses AI and computer vision to discover defective products before they’re shipped to customers.
Then there may be the Amazon Web Services (AWS) cloud platform, which is becoming a preferred destination for developers trying to construct AI software. AWS is working to dominate the three core layers of AI cloud services: infrastructure (data centers and chips), large language models (LLMs), and software.
Through the third quarter of 2024, management said AI revenue inside AWS grew by a triple-digit percentage 12 months over 12 months, and it’s currently growing 3 times faster than the cloud business did at the identical stage of its life cycle.
Berkshire bought Amazon stock in 2019, but Buffett has often expressed regret for not identifying the corporate’s potential much sooner. Nevertheless, his company’s position is value over $2.3 billion, so Berkshire stands to make a considerable amount of cash if Amazon stays a pacesetter within the AI race.
Coca-Cola(NYSE: KO) is the world’s largest beverage company, with people in 200 countries consuming 1.9 billion servings of its drinks every single day. Achieving that level of scale would not be possible without technology, and Coca-Cola is staying true to its history as an innovator by investing heavily in AI.
In April 2024, the corporate made a commitment to spend $1.1 billion over five years on Microsoft‘s Azure cloud platform, where it’ll access a portfolio of AI services to enhance its supply chains, productivity, and marketing.
Speaking of selling, Coca-Cola has already used AI in several campaigns. It launched Create Real Magic through the recent holiday period, which allowed users to generate holiday-themed digital snow globes on the corporate’s website.
Prior to that, it used AI to create a promotional version of its flagship soda called Coca-Cola Y3000, which captured what the drink could taste like within the 12 months 3000 based on mountains of information from customers.
Berkshire acquired 400 million shares of Coke between 1988 and 1994, at a complete cost of $1.3 billion. It never sold a single share, and today, that stake is value over $25 billion. Buffett probably never anticipated AI would develop into such an enormous a part of Coca-Cola’s future, but Berkshire will profit from the worth it creates, nonetheless.
Apple(NASDAQ: AAPL) accounted for around 50% of the entire value of Berkshire’s portfolio firstly of 2024, but Buffett and his team decided to take among the conglomerate’s profits by selling over half of the position. Apple stays Berkshire’s largest holding, though, with a 22.7% weighting in its portfolio.
Management has been preparing for the AI revolution for some time. Its strategy began with hardware, because the corporate needed to design latest chips and components for its latest iPhones, iPads, and Mac computers that were powerful enough to support the technology. With those now in place, the corporate was in a position to launch its Apple Intelligence software last 12 months, which introduced swathes of latest AI features.
These include latest writing tools that empower users to quickly summarize email and text messages after which generate outgoing replies. Apple Intelligence also can prioritize notifications for users based on their preferences, saving them time. Even the Siri voice assistant received a makeover, since it now taps into the knowledge and capabilities of OpenAI’s ChatGPT.
There are greater than 2.2 billion lively Apple devices worldwide, so the corporate could eventually develop into the most important distributor of AI to consumers. Due to this fact, despite the selling spree last 12 months, Berkshire could still do extremely well over the long run with its remaining stake.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Amazon, Apple, Berkshire Hathaway, Domino’s Pizza, and Microsoft. The Motley Idiot recommends the next options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.