Image source: The Motley Fool
Artificial intelligence (AI) has a lot of investors excited right now, yet billionaire investor Warren Buffett isn’t one of them. Despite owning shares in companies such as Apple (NASDAQ:AAPL) and Amazon, none of these investments were made solely based on their AI potential. In fact, Buffett seems to be quite cautious of the technology.
Instead, he’s warned investors that AI will give rise to an enormous amount of fraud, making scamming the biggest “growth industry of all time”.
Sticking to his principles
Despite his hesitant stance, Buffett isn’t blind to the benefits of this emerging technology. In the right hands, AI can be a remarkable tool with countless applications in finance, cybersecurity, automation, and work productivity among others.
However, with so many businesses claiming to be the next big thing, Buffett and his team are remaining disciplined. They’re focusing on the industries they understand the most, zooming in on the businesses with the widest competitive moats.
That means rather than chasing speculative AI stocks, he’s looking at the established players across the sectors that can leverage AI to improve their existing operations, using the proceeds to run phenomenal capital-return programmes. And right now, Apple seems to fit that bill.
Exploring Apple’s potential
While Buffett’s investment vehicle Berkshire Hathaway has trimmed its position in Apple throughout last year, it remains one of its largest holdings, representing 24% of the portfolio. As one of the largest consumer technology companies in the world, Apple produces an enormous amount of free cash flow driven by a loyal customer ecosystem.
Since 2013, the company’s been busy consistently buying back its own shares, with around $775bn spent over the last 12 years. To put this into perspective, that’s enough money to buy the entirety of Visa with another $100bn to spare. And with management approving yet another $100bn in buybacks during 2025, the rewards for shareholders look set to continue, especially if the firm can deliver on its AI ambitions.
So far, Apple has lagged when it comes to AI implementation. The rollout of Apple Intelligence has actually been quite slow and riddled with delays, which have seemingly continued into 2025. And the ongoing trade disruptions from newly-announced US tariffs aren’t exactly helping matters, which have led to around a quarter of Apple’s market-cap being lost in 2025.
However, that might soon change. The company has a record number of revamped product launches in the second half of 2025. That includes four new iPhone models, and updates for its AirPods, Apple Watches, iPads, and MacBooks. And with plans to hire another 20,000 people over the next four years to expand its R&D capabilities, the firm might soon be catching up on the AI front, generating even more cash flow over the long run.
Perhaps that’s why Buffett continues to hold a significant chunk of shares. And it’s why I think investors may want to take a closer look at this business.
