Apple and American Express are two of Berkshire Hasseway's biggest investments.
In addition to Apple's intelligence, Apple's promotion of services should also bring profitable growth to investors.
American Express is a resilient credit card brand that continues to adapt to its products to win the victory of a new generation of consumers.
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Warren Buffett is one of the best investors ever seen in the world. From 1965 to 2024, an investment of $100 Berkshire Hathaway It could have turned into $5.5 million.
If you want to invest some extra cash right away, Berkshire’s $263 billion stock portfolio is a great place to start. apple (NASDAQ: AAPL) and American Express (NYSE: AXP) These are two of Berkshire's largest investments by the end of 2024. At the time of writing, you can buy two shares for over $500. These companies have strong brands that serve as a solid anchor for a diversified portfolio.
Berkshire Hathaway held 300 million shares of Apple as of the end of 2024, worth $75 billion. Apple has been working well since Berkshire first started buying the stock in 2016. Its active equipment base has grown to over 2.3 billion and is still growing.
Buffett invests in companies with competitive advantages. As far as Apple is concerned, it starts with its brand and people's attachment to mobile phones. As CEO Tim Cook said on Apple's second-quarter yield, "Apple services are enriching the lives of our users all day long."
iPhone generates more than half of the company's revenue. People carry their phones with them, which only causes Apple’s cash to flow in. Revenue from services, including Apple Pay, generated twice as profit margins as sales of devices, and was Apple's fastest growing segment, with revenues up 12% year-on-year in the last quarter.
Apple can benefit greatly from artificial intelligence (AI). The introduction of Apple Intelligence makes AI-powered devices easy to implement. Apple is investing in deep integration of AI for its devices, which could drive more iPhone sales over time.
Another important reason why Buffett likes Apple is its profitability. Apple has generated $97 billion in net revenue over the past year with $400 billion in revenue. This provides ample resources to reward shareholders. For example, In the last quarter alone, it also returned $29 billion to shareholders through dividends.
Apple is indeed a gift that is constantly donating. Analysts currently expect the company's earnings per share to grow at an annual growth rate of 11% over the long term, which will drive higher stock prices.
Buffett’s history with American Express dates back to 60 years, when he first bought stocks with the opportunistic value of the Buffett partnership. Later, he bought shares for Berkshire Hathaway in the 1990s (a lot higher price). By the end of 2024, Berkshire still held more than 151 million shares of American Express, worth $45 billion at the time.
American Express has a very strong brand that has proven resilience in the face of economic uncertainty. Total card spending in the last quarter increased by 6% year-on-year due to health spending on goods and services. The steady growth in card spending can be translated into double-digit growth in the company's earnings per share.
The company has seen many growth opportunities, including the addition of 3.4 million new cards this quarter. Importantly, 60% of new customer accounts acquired worldwide are driven by millennials and Gen Z consumers. American Express is clearly the ideal brand for the younger generation, improving its long-term growth prospects.
More and more card members use their U.S. Express cards, the more likely they are to upgrade to premium cards that charge higher annual fees. In the last quarter, revenue from card fees increased by 18% year-on-year, representing the company's profitable revenue stream. The cost of premium cards will naturally attract high consumers. American Express Card Members have high average income and good credit profiles. This enhances business resilience through economic cycles.
Buffett discovered the eternal characteristics of the American Express brand decades ago. For investors of this legend, it seems to be the forever stock and it should continue to grow. Analysts expect earnings to grow at nearly 14% in the coming years.
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American Express is an advertising partner for Motley Fool Money. John Ballard has no position in any of the stocks mentioned. Motley fool has a place and recommends Apple and Berkshire Hathaway. Motley Fool has a disclosure policy.
Currently, Warren Buffett