Apple Inc. (NASDAQ: AAPL) stands as a crown jewel in Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) investment portfolio. Yet market dynamics suggest 2025 could BNB price in INRmark a strategic pivot point for Warren Buffett's conglomerate regarding this tech giant.
What's driving this potential shift? Despite public admiration for CEO Tim Cook's stewardship, fundamental changes in Apple's financial profile may compel Berkshire to reconsider its massive stake. Let's unpack the critical factors at play.
The Evolution of Apple's Investment Profile
Berkshire initiated its Apple position during Q1 2016, acquiring shares that represented textbook Buffett criteria. At that juncture, the Cupertino-based company traded at a modest 10.6 times trailing earnings - a bargain for a globally dominant consumer brand with robust growth prospects.
Fast forward to present day, and Apple's financial landscape has transformed dramatically. Revenue has climbed 66% since 2016 while earnings per share skyrocketed 157%. More significantly, investor sentiment has propelled the stock to an 850% surge, far outpacing operational growth.
This dramatic multiple expansion - now at 41 times trailing earnings - positions Apple far beyond traditional value investment parameters. The current valuation multiple suggests the market has fully priced in Apple's growth potential, potentially triggering Berkshire's exit strategy.
Valuation Concerns in the Current Market
Berkshire's recent activity reveals a clear pattern of gradual divestment, reducing holdings from 916 million shares in Q3 2023 to approximately 300 million currently. While tax optimization has been cited as partial motivation, the underlying investment thesis appears increasingly strained.
At 34 times forward earnings, Apple commands a premium that contrasts sharply with its projected 6% revenue growth for the coming year. This disconnect becomes particularly apparent when comparing AAPL to other tech equities offering stronger growth at more reasonable valuations.
The upcoming fiscal Q1 2025 results (ending December 2024) will provide crucial insights into iPhone 16 adoption rates. However, even moderate success may not justify maintaining such a substantial position given the current risk-reward calculus.
For investors following Berkshire's lead, this situation warrants careful evaluation of alternative opportunities in the tech sector that better align with value-oriented principles. The coming year may well mark a significant portfolio rebalancing for both Berkshire and its investment followers.
