Apple stock, now mired at its lowest level in four months, has faced a cascade of challenges this year – and it may have another one if Warren Buffett’s Berkshire Hathaway really starts selling.
Karishma Vanjani for Barron’s:
Warren Buffett’s holding company, Berkshire, has been one of Apple’s biggest backers. It owns a 5.9% stake, ranking behind only Vanguard Group, which holds 8.1% through its many mutual funds and exchange-traded funds, according to FactSet.
Based on Apple’s current share price, which had fallen for five consecutive trading sessions, including Tuesday morning, Berkshire’s stake in Apple is now worth $159 billion. It was valued at $167 billion in mid-February.
Apple stock, which still makes up about half of Berkshire’s equity portfolio, has come under pressure on a variety of fronts. The company has yet to offer detailed plans on an artificial-intelligence strategy and fewer iPhones are being sold in China, hurting overall revenue growth. A European Commission fine of nearly $2 billion over what it calls “abusive App Store rules,” disclosed Monday, isn’t good news either.
The next problem for the stock could be if Buffett sells more Apple. “I could see him selling sooner or later,” Mizuho analyst Daniel O’Regan wrote in a Tuesday research note. “In fact, I would not be surprised if he is selling right now.”
The next 13-F from Berkshire, showing its holdings as of the end of the first quarter, is due around May 15.
MacDailyNews Take: As we wrote just yesterday, “Hope springs eternal that Apple will finally get its act together and catch up to rivals, at least, on generative AI this year – likely to be announced at WWDC in June. Until then, AAPL shareholders into accumulation can look for some nice deals.”
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He does not hold the key. He holds the bag.
“In fact, I would not be surprised if he is selling right now.” – as a matter of fact, I just saw a news article today that stated Berkshire has sold some 10m AAPL shares in the last quarter.
AAPL is currently at $170/share – or back to around the same price I sold my holdings at 6 months ago. My timing wasn’t great – it ended up going back up to $190, but after seeing the Vision Pro, I lost confidence that Apple could continue to grow. Since then, the geopolitical situation has only gotten worse, with Apple selling less and less widgets in China (due to politics and difficult economical situation there).
Tim Cook, who previously brandished AR glasses as Apple’s next best thing must be getting nervous too – as seen by his recent jump onto the AI hype wagon. Sure, Apple can make its devices smarter with more AI – in particular, maybe Siri will finally see some love after having been left to languish by Cook for a decade – but how does this translate to growth for the company? Of all the big players touting ChatGPT like interfaces, Apple is the worst positioned to actually profit from such AI. Why? Because unlike the competition, Apple can’t sell ads around AI responses!
Until Apple/Cook get their act together and manage to bring to market the previously touted AR glasses or some other killer device, AAPL will continue to languish, in my view.