Berkshire Hathaway trims Apple stake again in Q2, but the iPhone maker remains the conglomerate’s biggest holding as services power profits
Berkshire Hathaway’s latest 13F shows the Warren Buffett-led group reducing its Apple stake again in the June quarter, continuing a selling spree that began in late 2023 and paused for several quarters. After the trim, Berkshire holds roughly 280 million Apple shares, still its largest equity position and a signal that while the pace of sales has slowed, the conglomerate remains heavily tied to Apple.
Even after the recent reductions, the value of Berkshire’s Apple stake sits around $64 billion, underscoring how central Apple remains to Buffett’s portfolio. The move appears to be a risk-management step to rebalance a portfolio that had become unusually concentrated in a single tech giant since Berkshire began buying Apple in 2016. While the sales draw attention, they do not erase the fact that Apple’s position is vast and earnings powerfully backed by a growing services business.
What the numbers show
Apple reported strong results for its fiscal third quarter, which roughly aligns with Berkshire’s June quarter. Revenue rose about 10% year over year, with earnings per share up around 12%. The company’s services segment continued to set records, delivering a gross margin in the mid-70s and contributing a substantial share of profits.
Specifically, Apple’s services generated about $20.7 billion in gross profit versus $23.0 billion from products, representing roughly 47% of total gross profit despite services accounting for about 29% of revenue. Services revenue climbed more than 13% year over year, outpacing the products segment’s 8% growth, highlighting the margin and cadence benefits of a more recurring, software- and platform-driven business.
Catalysts and what to watch
– Services upside: Key drivers include advertising, the App Store, and cloud services. These areas depend on Apple’s installed base of devices and tend to be more resilient through hardware cycles, helping cash flows stay steady.
– Valuation and optionality: Apple trades at a price-to-earnings ratio around the mid-30s. If services continue expanding its contribution to profits and revenue reaccelerates, the current multiple can be justified by a larger recurring earnings stream. Potential catalysts beyond services include new iPhone form factors that could spark a fresh upgrade cycle and deeper AI integrations across software.
– Risks: A slowdown in top-line growth—should growth drift back to mid-single digits or lower—could put pressure on the stock’s multiple in the near term. Berkshire’s own strategy also remains opaque regarding what it plans for the remainder of its Apple stake, leaving investors to weigh Apple’s fundamentals independently.
Why Berkshire’s move matters for investors
Berkshire’s selling pattern signals a desire to manage concentration risk and balance within its portfolio, not a repudiation of Apple as an investment. Apple’s own results show a business leaning into more profitable, recurring revenue, supported by a robust services engine and strong capital returns. For investors, the takeaway is to assess Apple on its fundamentals—services momentum, margins, and growth prospects—while recognizing Berkshire’s stance as a reminder of risk management rather than a verdict on Apple’s long-term potential.
Bottom line
Apple remains Berkshire Hathaway’s largest single investment, even after recent sales. With services continuing to drive a meaningful share of profitability and a broad set of catalysts on the horizon, the stock presents a mix of upside potential and valuation risks. Investors should evaluate Apple based on its services trajectory, capital-return discipline, and the durability of its earnings, rather than on Berkshire’s quarterly trading activity alone.
Additional observations
– The ongoing growth of Apple’s services business helps diversify earnings and may support a premium multiple as the company increasingly monetizes its installed device base.
– Watch for any shifts in Apple’s capital allocation strategy, updates on services margins, and new product or software integrations that could influence both top-line growth and profitability in the near term.
– Given Berkshire’s position, any extension or slowdown in Apple share sales could signal a broader reading of market risk and balance-sheet strategy by the conglomerate, though it would not necessarily change Apple’s underlying business thesis.
Summary
Berkshire trimmed its Apple stake again in the June quarter but left the shares as the largest single holding, reflecting continued confidence in Apple’s long-term strategy. Apple’s services segment remains a key growth driver, contributing a large share of gross profit with expanding margins while revenue grows steadily. The stock’s valuation remains a consideration, with potential upside tied to ongoing growth in services and possible new product and AI-driven enhancements, balanced against risks of slower growth in base hardware and overall market sentiment. Positive momentum in services and the durability of Apple’s ecosystem offer a hopeful outlook for investors willing to engage with the stock’s mix of growth and valuation risk.