Some might interpret Berkshire Hathaway’s decision to sell its stake in Apple as a lack of conviction in the iPhone maker’s growth story. But many on Wall Street are urging investors to look beyond the news and stay calm.
Warren Buffett’s group disclosed Saturday that it sold nearly half its stake in the tech giant during the second quarter. Its stake is now worth about $84 billion, down from about $140 billion at the end of March. The sale came during a wild stock market rally that sent Apple shares up 23% and propelled the S&P 500 from one record high to another.
Since 2016, when Warren Buffett first announced a statement Berkshire’s shares in Apple have soared nearly 900% as the company has strengthened its grip on the industry, racking up billions of dollars in unrealized profits along the way.
“Buffett’s reduction in Apple is simply an attempt to manage risk,” said Joe Gilbert, portfolio manager at Integrity Asset Management. “If there were any concerns about Apple’s long-term viability, Buffett would have pulled out entirely. Like other Berkshire stock reductions, Buffett has realized a significant unrealized gain.”
The Berkshire portfolio revelation comes just days after Apple released its quarterly results, which showed a return to revenue growth and suggested that new AI features would boost iPhone sales in the coming quarters. Apple shares were flat after the earnings report and ultimately ended the week higher despite the broader selloff.
While it’s hard to ignore the investment strategy of Buffett — long known as the “Oracle of Omaha” — Berkshire’s stake in Apple has become so large in recent years that some investors have begun to wonder if the company will have to trim its stake to balance its holdings. Even after the breakup, Apple has remained in a slump. remains Berkshire’s largest single position.
“If you have that huge position, you’re taking some profits and reducing some of your concentration risk,” said Cathy Sievert, a research analyst at CFRA. “They still have a fairly concentrated portfolio.”
It’s also not the first time Berkshire Hathaway has cut its stake in Apple. At its annual meeting in May, the company revealed that it had reduced its stake during the first quarter of the year. At the time, Buffett said he would reduce his stake in Apple. behold Investors note that tax implications may have played a role in the sale.
Representatives for Apple and Berkshire Hathaway did not respond to requests for comment outside regular business hours on Sunday.
The latest announcement comes amid broader concerns about a potential economic slowdown ahead. Worse-than-expected jobs data on Friday raised concerns that the Federal Reserve may have waited too long to start cutting interest rates, sending the Nasdaq 100 into a technical correction and the Chicago Board of Trade’s volatility index toward 25.
Shares of giants like Microsoft, Amazon and Alphabet have fallen from their record highs in early July. In all, the Nasdaq 100 has lost more than $3 trillion in value during that period, with Nvidia and Tesla each seeing declines of more than 20%. Apple shares, meanwhile, are down about 6% from their all-time highs.
It’s possible that Berkshire, like a growing number of investors, wants to see more evidence that Apple’s investments in artificial intelligence will pay off through revenue growth, and doesn’t think that’s happening fast enough, according to Brian Mulberry, client portfolio manager at Zacks Investment Management.
Apple’s valuation multiple — at 33 times future earnings as of mid-July — was 11 points higher than the broader S&P 500, a gap last seen in the wake of the pandemic and financial crisis, according to data compiled by Bloomberg. But despite the valuation premium, Mulberry believes it still makes sense for investors to own Apple stock. “They’re still in a good balance sheet position and they’re still going to grow earnings faster than the broader market,” he said.
Others, including Wedbush analyst Dan Ives, point to Apple’s brand loyalty and future growth — it’s on the cusp of what he believes is a major upgrade cycle that will drive revenue growth in 2025 and 2026.
“While some may read this as a concern about confidence, Apple just delivered a strong quarter with a massive AI-driven supercycle ahead, and we don’t view this as the time to hit the exit button,” Ives said.
Of course, Apple isn’t the only stake Berkshire has cut recently—it’s also been Unloading stocksMeanwhile, Buffett has cut his stake in Bank of America Corp. by 8.8% since mid-July. Some see that as a sign that Buffett doesn’t see any individual problems with either company, but is instead betting that the U.S. consumer and broader economy are about to weaken.
“Buffett may feel we are heading into a recession, so by raising money now, he can buy companies at cheap prices later,” said Jim Awad, senior managing director at Clearstead Advisors. “He may feel there is an opportunity coming.”