Buffet Disposes of Apple Shares Once More in Recent Developments
Warren Buffett, the legendary investor, has reduced Berkshire Hathaway's stake in Apple shares, citing valuation concerns and strategic portfolio rebalancing [1][2]. This move, which saw Apple drop from about 50% of Berkshire's publicly traded portfolio in 2024 to around 24% by mid-2025, shifted Apple from an overweight to an underweight position in tech [2].
The reduction in Apple shares comes as the tech giant's stock trades at a relatively high price-to-earnings ratio (~32x trailing earnings) for an expected earnings growth of only about 6.5% [2]. Additionally, fears of rising capital gains tax rates have contributed to the selling [1].
The transition in Berkshire leadership from Buffett to Greg Abel may prompt further portfolio changes, including possibly exiting Apple if the company does not demonstrate continued competitive growth, especially in AI innovation, where Apple is perceived to be lagging [1].
Investors should exercise caution in the near term due to valuation and competitive challenges. Apple's stock has declined 6% over the past 12 months partly due to investor skepticism about the slow rollout of AI features in its latest iPhone, raising concerns about growth momentum [1]. Its current premium valuation coupled with a moderate growth outlook means that without meaningful innovation or market share gains, Apple may face further downward pressure [2].
However, it's important to note that Apple remains a dominant company with strong fundamentals and a large installed customer base. Berkshire still earns substantial dividends from its holdings [1].
Despite the challenges, Apple's sales in China have shown a decline in the latest quarterly results, but the overall revenue did increase and beat expectations [3]. The revenue growth expectation for the December quarter is lower than analysts' expectations for the crucial holiday season [4].
Warren Buffett, aged 94, has significantly reduced his stake in Apple shares by 25% in the third quarter [5]. This is not the first time Buffett has sold Apple shares; he also sold shares in the first and second quarters [6].
While some analysts view the sales as a portfolio realignment, others, like Jim Shanahan from Edward Jones, suggest that the sales could be related to the death of Buffett's business partner, Charlie Munger, who passed away last year [7].
Despite the recent sales, Berkshire Hathaway's stake in Apple remains the company's largest position [8]. The majority of analysts still recommend buying Apple stock and see a 10% upside potential with an average price target of $246 [9].
In summary, Buffett and Berkshire's Apple share reductions appear driven by valuation and strategic portfolio shifts rather than outright negative views on the company. Investors should be cautious in the near term due to valuation and competitive challenges but also weigh Apple’s strong market position and cash flow. Monitoring Apple's innovation pace and competitive positioning in emerging technologies like AI will be crucial for assessing its future prospects [1][2].
Sources:
- CNBC
- Bloomberg
- Reuters
- MarketWatch
- The Wall Street Journal
- Yahoo Finance
- Edward Jones
- Berkshire Hathaway
- Business Insider
Investors need to pay extra attention to Apple's ongoing innovation in AI technology, considering Berkshire Hathaway's concerns about the firm's competitive positioning in this sector. Warren Buffett's decision to reduce Berkshire Hathaway's stake in Apple shares also highlights the impact of business strategies and technology on the company's financial health and investing potential.
