Warren Buffett has long been known for his cautious approach to investing in technology stocks. He prefers businesses he fully understands and has often admitted to passing on major tech opportunities for this reason. Despite this, his company, Berkshire Hathaway, holds a significant portion of its portfolio in technology companies. In fact, over 25% of Berkshire’s $300 billion portfolio is allocated to just four major tech stocks.
Buffett’s Top Four Tech Stocks
Although Buffett remains selective with technology investments, his portfolio features four key tech stocks. One company, however, dominates the group by a significant margin.
1. Apple (NASDAQ: AAPL)
Apple holds the largest share of Berkshire Hathaway’s portfolio. Although Buffett has reduced his stake in recent quarters, the company still owns 300 million shares valued at approximately $70.5 billion. This investment accounts for 23.5% of Berkshire’s total holdings, making it the firm’s largest single stock position by far.
2. VeriSign (NASDAQ: VRSN)
The next largest tech investment, VeriSign, represents a much smaller portion of the portfolio. Berkshire’s stake in the domain registry and internet infrastructure company is worth around $2.8 billion, making up just 0.9% of total holdings.
3. Amazon (NASDAQ: AMZN)
Amazon ranks close behind VeriSign. Berkshire holds a nearly $2.4 billion position in Amazon, accounting for 0.8% of the portfolio. While many consider Amazon a consumer stock, its dominance in cloud computing and artificial intelligence firmly places it in the tech sector.
4. Nu Holdings (NYSE: NU)
Nu Holdings rounds out Buffett’s tech investments, though it differs from traditional tech companies. As Latin America’s largest digital banking platform, Nu operates in the fintech sector. Berkshire owns over $1 billion worth of Nu stock, which represents 0.4% of its total portfolio.
How These Stocks Compare
The market values of these companies differ greatly. Apple, the world’s largest company, has a market cap of $3.6 trillion. Amazon follows closely with a $2.5 trillion valuation. Meanwhile, Nu Holdings and VeriSign remain much smaller, with market caps of $59 billion and $21 billion, respectively.
Valuation and Growth
Buffett has always focused on company valuation, and none of these stocks currently appear cheap.
1. Amazon’s forward price-to-earnings (P/E) ratio: 37.6
2. Apple’s forward P/E ratio: Nearly 30
3. VeriSign’s forward P/E ratio: 23.9
4. Nu Holdings’ forward P/E ratio: 20.9 (the most affordable in this group)
Growth rates also vary significantly. Nu Holdings leads in revenue growth, reporting a 44.9% increase year-over-year, with earnings soaring 82.6% higher. Amazon also posted strong earnings growth at 55.2%, although its revenue grew by a smaller 11%. In contrast, Apple and VeriSign delivered more modest growth.
Dividend Payments
Income-focused investors may not find these stocks appealing. Amazon, Nu Holdings, and VeriSign do not offer dividends. While Apple pays dividends, its forward yield sits at a modest 0.42%.
Buffett’s Best Tech Investment
Among these four stocks, which one stands out as the best investment? Each offers strong long-term potential, but two, in particular, show exceptional promise.
1. Nu Holdings
Nu Holdings continues expanding rapidly across Latin America. More than 50% of Brazilian adults use its financial platform, and the company is aggressively expanding into Mexico. Its disruptive approach to digital banking could drive significant future growth.
2. Amazon
If only one stock could be chosen, Amazon would likely be the best bet. It dominates e-commerce, holds a massive cloud computing advantage through Amazon Web Services (AWS), and continues expanding into new industries, including healthcare and autonomous vehicles.
Buffett may not increase his stake in Amazon anytime soon, but history suggests that holding this stock over the next five to ten years could generate substantial returns.
Is It Time to Invest?
Some investors worry about missing out on big opportunities. However, history shows that the best time to invest is often before a stock reaches its full potential. Over the years, several top-performing stocks have delivered massive returns for those who bought early.
For example:
1. Nvidia – A $1,000 investment in 2009 would now be worth $320,756
2. Apple – A $1,000 investment in 2008 would have grown to $45,331
3. Netflix – A $1,000 investment in 2004 would now be worth $527,508
Right now, experts have identified three promising stocks with similar potential. While these opportunities don’t come often, they could be a smart move for long-term investors.