Warren Buffett, the legendary investor and chair of Berkshire Hathaway, is renowned for his ability to pick stocks with immense long-term potential. As of March 31, Berkshire Hathaway’s diversified portfolio is valued at $331.68 billion. Among his many investments, three companies stand out as particularly promising for 2024: Apple, Amazon, and Chubb.
1. Apple (Nasdaq: AAPL)
Buffett’s first investment in Apple was in 2016, and it has since grown to become the largest holding in Berkshire Hathaway’s portfolio, accounting for 40% of its value, or over $135 billion. Despite a 4% year-over-year (YoY) drop in revenue to $90.8 billion in the March-ended quarter due to slower sales of iPhones, iPads, and the Apple Vision Pro, the company offset this decline with a notable increase in revenue from its services sector, which includes iCloud and Apple TV+.
Apple’s stock has rebounded from its low of around $165 on April 19 and is now hovering above $193 as of June 11. Recently, Apple entered the AI arena, announcing several AI tools and features in collaboration with OpenAI at the Worldwide Developer Conference. These include enhancements to Siri and AI-driven features such as custom emojis and email summaries.
Wedbush analyst Daniel Ives reiterated an “Outperform” rating on Apple with a target price of $275 per share, citing potential growth from AI integrations. Ives predicts that AI will introduce significant monetization opportunities and drive the next growth cycle for Apple’s iPhone, particularly with the anticipated AI-powered iPhone 16.
2. Amazon (Nasdaq: AMZN)
Buffett’s Berkshire Hathaway began investing in Amazon in 2019 and currently holds 10 million shares worth $1.8 billion. Buffett has admitted regret for not investing in Amazon earlier, but the company’s impressive performance and future prospects justify the decision to invest.
Amazon reported a 17% YoY growth in Amazon Web Services (AWS), contributing to a 13% overall revenue increase to $143.4 billion for Q1. CEO Andy Jassy highlighted that the combination of renewed infrastructure modernization and the appeal of AWS’s AI capabilities is accelerating AWS’s growth, now at a $100 billion annual revenue run rate.
Amazon’s strategic initiatives include partnerships with Accenture to integrate AI in regulated sectors and with Nvidia on Project Ceiba to develop an AI supercomputer. Additionally, Amazon Fresh plans to reduce prices on over 4,000 grocery items by more than 30% to remain competitive.
Bernstein analysts are optimistic, noting that cloud optimization efforts have likely bottomed out, with a return to a 20%+ growth rate expected by year-end.
3. Chubb (NYSE: CB)
Berkshire Hathaway recently revealed a significant investment in Chubb, a global insurance leader. With a stake worth $6.72 billion, Berkshire Hathaway owns 25.92 million shares. Chubb operates in over 50 countries, offering a variety of property and casualty (P&C), health, and life insurance products.
In the March-ended quarter, Chubb reported a 13.3% YoY increase in net income to $2.14 billion and a 20.3% rise in core operating income to $2.22 billion. The firm’s P&C net premiums (excluding agriculture) grew by 13.3% YoY, driven by a 19.3% increase in consumer insurance. Underwriting income also rose by 15.4% to $1.40 billion.
Chubb CEO Evan G. Greenberg emphasized the company’s strong performance across its commercial and consumer P&C and Asia life businesses. He highlighted a favorable P&C underwriting environment in North America, with pricing exceeding loss costs. Greenberg expressed confidence in Chubb’s ability to grow operating earnings through P&C revenue growth, underwriting margins, investment income, and life income.
Given Berkshire Hathaway’s extensive insurance operations, including subsidiaries like Geico, Chubb represents a strategic and complementary investment for Warren Buffett.
The investment strategies of Warren Buffett continue to highlight companies with strong fundamentals and significant growth potential. Apple, Amazon, and Chubb stand out in Berkshire Hathaway’s portfolio as top stocks to watch in 2024, each poised to capitalize on technological advancements and market opportunities.
