9 Stocks Warren Buffett Has Bought Since Beginning of AI Revolution

4. Capital One Financial Corporation (NYSE:COF)

Number of Hedge Fund Holders: 54 

Berkshire Hathaway’s Shares in Q1 2024: 12,471,030  

Capital One Financial Corporation (NYSE:COF) operates as the financial services holding company for several financial institutions in the US. The stock is a typical Buffett pick, showing strong earnings and growth potential while trading at a reasonable valuation. The company has featured in the Buffett 13F portfolio since the first quarter of 2023. After adding 25% to the initial shares in the second quarter of 2023, there has been little activity around this stake. The value of this stake, at the end of the first quarter of 2024, was in excess of $1.8 billion. It represents 0.55% of the overall 13F portfolio.

An important indicator of the aggressive growth strategy of Capital One Financial Corporation (NYSE:COF) is the purchase of Discover Financial Services for $30 billion. Despite purchasing the firm for a 26% premium, the deal is expected to usher in synergies worth $2.7 billion and contribute to a more than 15% rise in earnings per share within the next three years for Capital One, according to analysts.

In its Q1 2024 investor letter, Ariel Investments, an asset management firm, highlighted a few stocks and Capital One Financial Corporation (NYSE:COF) was one of them. Here is what the fund said:

“We also added global financial services company, Capital One Financial Corporation (NYSE:COF). The company is the largest online consumer and commercial bank with a leading position in general purpose and small business credit cards. We view the company as competitively advantaged particularly due to their investment in technology. According to recent reports, COF is also rated as one of the leading banks within Artificial Intelligence (AI). Notably, the company recently announced an acquisition of Discover Financial Services (DFS) which we believe would produce significant long-term earnings accretion. COF will be able to leverage DFS’ proprietary payments network, enabling direct interaction with merchants and consumers. This closed loop dynamic should lead to higher volumes of credit card conversions presenting further upside for its shares. At current levels, we view the long-term outlook to be attractive, given favorable business trends, stabilizing delinquency rates within the credit card industry, synergies from the DFS acquisition and COF’s enhanced focus on technology.”