Could Apple Lose Its Top Position in Berkshire Hathaway's Portfolio?

The question on every investor's mind is no longer if Berkshire Hathaway will evolve its portfolio—it's how and when. As Warren Buffett prepares to step down as CEO by year-end, the baton is passing to Greg Abel, a leader with a distinct operational acumen and a strategic eye for high-growth sectors. For Apple (AAPL), which has dominated Berkshire's holdings for years, this transition raises a critical question: Could the tech giant lose its crown?

Apple's Reign and the Buffett Era

Apple has been Berkshire's largest holding since 2016, peaking at over $174 billion in 2023. As of Q1 2025, it still commands 25.76% of the portfolio, valued at $66.6 billion. Buffett's rationale for this bet has always been clear: Apple's durable moat, recurring revenue streams, and global brand power align with his value-investing principles. However, the past two years have seen a deliberate reduction in Apple's stake. Buffett has sold shares to offset higher capital gains tax rates and has expressed concerns about Apple's slow AI integration, which has dampened investor sentiment.

The stock's 19.57% year-to-date decline as of May 2025 reflects broader market skepticism. While Apple's services and hardware divisions remain robust, its lag in AI adoption—a sector now central to tech's next frontier—has made it a less compelling bet for some.

Abel's Strategy: A New Chapter

Greg Abel's leadership promises a strategic pivot. Unlike Buffett, who has historically avoided heavy exposure to tech, Abel has signaled a preference for cash-generative, high-quality consumer and industrial businesses. Under his watch, Berkshire has already taken decisive steps:
- Exiting Citigroup and Nu Holdings in Q2 2025.
- Trimming Bank of America and Capital One stakes.
- Boosting positions in Constellation Brands (despite its revenue cuts) and Domino's Pizza.

Abel's focus on renewable energy and infrastructure—evident in Berkshire Hathaway Energy's expansion—suggests a shift toward sectors with stable cash flows and regulatory tailwinds. This contrasts with Apple's current challenges in monetizing AI, which could make it a less attractive allocation under Abel's mandate.

The Data-Driven Case for Change

Berkshire's Q1 2025 13F filings reveal a portfolio increasingly tilted toward sectors like utilities, consumer staples, and industrials. American Express (AXP) now accounts for 15.77% of the portfolio, closing the gap with Apple's 25.76%. Meanwhile, cash reserves have ballooned to $348 billion, a figure Abel has defended as a strategic buffer.

Abel's approach to capital deployment is likely to prioritize sectors with predictable returns over high-risk, high-reward tech bets. While Apple remains a cornerstone of Buffett's legacy, its future in Berkshire's portfolio hinges on two factors:
1. Apple's ability to accelerate AI integration and demonstrate meaningful growth.
2. Abel's willingness to reallocate capital toward sectors like renewables, where Berkshire has already made inroads.

Investment Implications

For investors, the key takeaway is this: Diversify your exposure to Berkshire's portfolio shifts. If Abel reduces Apple's stake, it could free up capital for high-growth opportunities in AI or renewables. However, Apple's brand strength and ecosystem advantages remain formidable. The stock's valuation, currently trading at a P/E of 24, still reflects a premium to its historical average but offers a discount to peers like Microsoft (MSFT) and Nvidia (NVDA).

Action Steps for Investors:
1. Monitor Berkshire's 13F filings for updates on Apple's position.
2. Consider hedging tech exposure with Berkshire's emerging bets in utilities and industrials.
3. Evaluate Apple's AI roadmap—a $100 billion investment in AI by 2026 could reinvigorate its appeal.

Conclusion

Apple's reign as Berkshire's top holding is far from guaranteed. While its foundational strengths endure, the shift in leadership and strategic priorities under Greg Abel creates a window for reallocation. Investors should brace for a more dynamic portfolio, where cash reserves are deployed not just for stability but for seizing the next wave of innovation. As the Buffett era fades, the Abel chapter promises a blend of continuity and evolution—a test of whether Apple's crown can withstand the winds of change.