In This Article:
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Warren Buffett has steered the Berkshire Hathaway to market-crushing returns since 1965.
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He uses a long-term investing strategy, which relies on time and the magic of compounding.
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He never chases hot trends, but three of his holdings use AI to supercharge their businesses.
On May 3, Warren Buffett announced he will step down from his role as the CEO of the Berkshire Hathaway holding company at the end of 2025. He has been in the job since 1965, and his incredible stock-picking ability contributed to a stupendous compound annual return of 19.9% for investors.
In other words, an investment of $1,000 in Berkshire stock in 1965 would have been worth a whopping $44.7 million at the end of 2024. The same investment in the S&P 500 index would have grown to just $342,906 over the same period.
Although Buffett is stepping down as CEO, he will remain Berkshire's chairman so he will still have some influence over the conglomerate's strategy. That means Buffett's brand of long-term investing, which focuses on companies with steady growth, reliable profitability, and strong management teams, is likely to endure.
One thing Buffett never did was pile into the latest stock market trends — not even those as powerful as artificial intelligence (AI). With that said, three existing holdings, which make up 32.9% of Berkshire's $286 billion portfolio of publicly traded stocks and securities, are using AI to supercharge their legacy businesses.
Amazon (NASDAQ: AMZN) operates the world's biggest e-commerce platform, and it uses AI in several ways. The technology is woven into the recommendation engine on Amazon.com to show shoppers the products they are most likely to buy, and it also powers the Rufus virtual assistant, which helps customers make the most informed decisions.
But the Amazon Web Services (AWS) cloud platform is the real engine behind the company's AI strategy. AWS designed its own data center chips for AI development, which are up to 40% cheaper to use than third-party hardware from suppliers like Nvidia. It also created its own family of large language models (LLMs) called Nova, which the company claims can save developers up to 75% on costs compared to using other third-party models on the AWS Bedrock platform.
Then there is the Amazon Q AI assistant, which is embedded into AWS. It can help businesses analyze their internal data, and it can even accelerate human-led coding tasks by 80%. This means software projects are completed far more quickly, and at a lower cost.