Buffett’s top AI stocks to watch

Warren Buffett has around $90 billion invested in nine companies that are heavily involved in artificial intelligence (AI). Despite his usual reluctance to invest in businesses he doesn’t fully understand, Buffett sees potential in these AI-focused companies. Apple is the largest holding in Berkshire Hathaway’s portfolio, valued at nearly $59.3 billion. AI has been a key part of Apple’s development strategy for years, although the launch of Apple Intelligence in 2024 hasn’t yet driven the expected upgrade super-cycle for iPhones. Berkshire Hathaway owns about $2.1 billion worth of Amazon shares. Amazon Web Services plays a crucial role in the AI sector as the world’s largest cloud services provider, benefiting greatly from the increased demand for AI model deployment. Alphabet (Google) and Microsoft are also part of Buffett’s “secret portfolio,” managed through New England Asset Management. Both companies are major players in cloud services and have made significant investments in AI technologies.

Buffett’s AI-focused investments

IBM, known for its successful Watson AI technology, continues to be a prominent player in the AI field. Texas Instruments manufactures edge AI products and collaborates on power management and sensing technologies for data centers. Broadcom produces AI products like Ethernet switches and custom AI accelerators to enhance AI workloads. NXP Semiconductors supports the AI ecosystem with products designed for edge AI deployments. The best pick among these AI investments depends on individual investment strategies. For income investors, Texas Instruments, with a forward dividend yield of 2.73%, may be the most attractive. Alphabet stands out for its valuation and growth prospects. However, Amazon appears to be the best all-around AI stock, well-positioned to benefit from the ongoing migration of applications and data to the cloud and its expansion into new markets such as healthcare, autonomous ride-hailing, and satellite internet services.