Warren Buffett announced on May 3 that he will step down as CEO of Berkshire Hathaway at the end of 2025. Buffett has held the position since 1965, contributing to a remarkable 19.9% compound annual return for investors. This means a $1,000 investment in Berkshire stock in 1965 would have grown to $44.7 million by the end of 2024, far surpassing the $342,906 it would have grown to if invested in the broader market.
Although stepping down as CEO, Buffett will remain Berkshire’s chairman, ensuring his focus on long-term investing endures. His strategy has consistently prioritized companies with steady growth, reliable profitability, and strong management teams. Three of Berkshire’s significant holdings, which together constitute 32.9% of its $286 billion portfolio, are leveraging AI to innovate and drive growth within their established businesses.
Amazon, the world’s leading e-commerce platform, utilizes AI in numerous ways. Its recommendation engine on Amazon.com helps shoppers discover products they are likely to buy, and the Rufus virtual assistant supports informed customer decisions. However, the real AI driver for Amazon is Amazon Web Services (AWS).
AWS developed its own data center chips for AI, which are 40% cheaper than third-party alternatives. AWS’s proprietary AI model family, Nova, can save developers up to 75% on costs compared to third-party models. AWS also offers the Amazon Q AI assistant, which accelerates human-led coding tasks by 80%, significantly reducing software project costs and timelines.
In the first quarter of 2025, Amazon generated $155.7 billion in total revenue, with AWS contributing $29.3 billion. AI revenue within AWS is now growing at a triple-digit percentage annually, making AI a critical growth driver for both AWS and Amazon as a whole. Berkshire acquired Amazon stock in 2019, and Buffett has acknowledged his regret for not identifying the opportunity sooner.
Buffett’s transition from CEO role
Amazon’s AI growth potential suggests substantial future rewards for Berkshire. Coca-Cola, the world’s largest beverage company, has aggressively invested in technology and AI.
In 2023, it appointed Pratik Thakar as head of generative AI to spearhead its AI strategy. Coca-Cola has used AI to craft interactive marketing campaigns and to develop new products like Coca-Cola Y3000, whose flavor was predicted using customer data through AI models. In 2024, Coca-Cola signed a deal with Azure to integrate AI into its manufacturing processes, supply chains, and marketing, committing $1.1 billion over five years to this transformation.
Buffett acquired 400 million Coca-Cola shares between 1988 and 1994 for $1.3 billion, and that investment is now worth $28.6 billion, demonstrating the power of long-term investing and compounding returns. Last year alone, Berkshire earned $776 million from its Coca-Cola stake. Apple represents the largest single holding in Berkshire Hathaway’s portfolio.
Buffett and his team invested about $38 billion in Apple shares between 2016 and 2023, with the position valued at over $170 billion going into 2024. While Buffett has reduced this stake, Apple still represents 22.2% of Berkshire’s portfolio. Apple has been preparing for the AI revolution by designing its own chips optimized for AI workloads.
The launch of Apple Intelligence, a suite of AI-powered applications and features, has integrated AI deeply into its operating systems. These tools streamline various tasks such as summarizing emails, generating replies, and prioritizing notifications. With over 2.35 billion active Apple devices globally, Apple is positioned to be a significant distributor of AI to consumers, potentially driving substantial returns for Berkshire Hathaway.
As Warren Buffett transitions to his new role, his legacy of identifying and investing in companies with sustainable growth potential continues to influence Berkshire Hathaway’s portfolio, particularly through these AI-driven enterprises.
