1. Apple Inc. (NASDAQ:AAPL)
Warren Buffett’s First Major Purchase: 2016
Berkshire Hathaway’s Latest Investment Stake: $84.25 Billion
Number of Hedge Funds Holding Stakes as of Q2: 184
Apple Inc. (NASDAQ:AAPL) is one of the best long-term stocks to buy, according to Warren Buffett, a consumer tech giant. The company is engaged in developing and selling an array of devices, including iPhones, iPads, and Mac’s wearables, among others.
The company’s competitive edge stems from its game-changing devices and solutions that have propelled it to a three trillion dollar empire. Recently, the company unveiled the iPhone 16, a new device expected to reinvigorate growth in its slowing iPhone business. The company is also betting on artificial intelligence as it aims to strengthen its product pipeline to attract more sales.
Analysts have touted the new iPhone as a product that could be the most successful iPhone yet, likely to generate more value. Apple Inc. (NASDAQ:AAPL)’s revenue growth in the past year, up to the third quarter of 2024, has been relatively slow, increasing by just 0.43%. However, there was a significant jump in earnings during the third quarter of 2024, with a notable quarterly increase of 4.87%. This suggests a consistent financial path, though, with a moderate pace of growth.
After rallying for the better part of the year, Apple Inc. (NASDAQ:AAPL) is not necessarily cheap, as it trades at a price-to-earnings multiple of 29. Nevertheless, the premium valuation is expected of a three trillion dollar company that is poised to generate significant value.
Apple remains Buffett’s biggest holdings despite downsizing his stakes by up to 56% in the first two quarters of the year. The oracle of Omaha sold roughly 510 million shares in the tech giant. Nevertheless the company still accounts for about 40% of the portfolio.
It remains one of Buffett’s longest investments owing to the fact that it pays a dividend with a yield of 0.45%. Additionally, the company returns value through stock buybacks. By June 2024 end, 184 out of the 912 hedge funds profiled by Insider Monkey were the firm’s investors. Apple Inc. (NASDAQ:AAPL)’s largest shareholder is Warren Buffett’s Berkshire Hathaway, whose $84.25 billion stake also makes the stock the biggest in Berkshire’s portfolio.
Here is what Mar Vista Focus strategy said about Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter:
“Investors were reminded of the strength of the Apple Inc. (NASDAQ:AAPL) ecosystem as management demonstrated how generative AI solutions would be integrated into Apple’s 1.2 billion iPhone installed base. Apple plans to integrate generative AI features into its iOS 18, which will be broadly released in the fall with the iPhone 16. We believe Apple should benefit from generative AI as it will spur a meaningful iPhone upgrade cycle and create new avenues of monetization through its app store and advertising offerings. We believe this will support intrinsic value growth that will range between high-single-digits and low-double-digits over our investment horizon.”
The best long-term stocks to buy, according to Warren Buffett, are high-quality companies poised to generate long-term value. However, given that the artificial intelligence arms race is just but starting, there are under-the-radar AI stocks trading at highly discounted valuations that hold greater promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than the top activist investment plays, check out our report about the cheapest AI stock.
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