Berkshire's Apple Gambit: Was Buffett's Timing Perfect? What's Next?

The story of Berkshire Hathaway’s gradual reduction of its once-massive Apple stake has become a case study in investment strategy. Over the past two years, Warren Buffett’s conglomerate slashed its holdings from 900 million shares (valued at $150 billion in late 2023) to just 300 million by late 2024—a reduction of 66.5%. Critics have long debated whether this move reflects prescient timing or missed opportunities. As Apple’s stock price surged 43% since the selling began, the question lingers: Did Buffett time his exits perfectly? And what does the future hold for both Berkshire and Apple?

The Timing Debate: Perfect Exit or Missed Upside?

Berkshire’s sales were driven by a mix of valuation discipline, tax planning, and portfolio diversification. When the sell-off began in early 2024, Apple’s P/E ratio had ballooned to 37x, nearly tripling from its 2016 level of 10.6. Buffett, who famously avoids overvalued stocks, cited stagnant earnings growth—Apple’s EPS had grown just 1.3% annually since 2022—as a key reason to rebalance.

Yet the timing of sales relative to Apple’s stock performance raises questions. By Q4 2024, Apple’s shares had risen 7.6% that quarter alone, and its stock price had climbed 43% since the sell-off began. If Berkshire had held its peak stake, its Apple position would now be worth $250 billion, versus the $75 billion it currently holds.

Critics argue Buffett left billions on the table. Proponents counter that the goal was never to maximize short-term gains but to reduce risk and free up cash. By late 2024, Berkshire’s cash reserves hit a record $334 billion, up from $128 billion in 2022—a direct result of equity sales, including Apple.

Apple’s Current Crossroads: Services Rise, iPhones Struggle

Apple’s Q1 2025 results ($124.3 billion in revenue) underscore its resilience in services but highlight challenges in hardware. Services revenue grew 14% YoY to $26.3 billion, now comprising 21% of total revenue—a testament to its ecosystem’s stickiness. Meanwhile, iPhone sales fell 1% YoY, driven by a 11% revenue drop in Greater China due to regulatory hurdles and inventory adjustments.

The iPhone SE 4 (launched as the iPhone 16e) became a bright spot, contributing to Apple’s first-ever Q1 leadership in global smartphone sales with 19% market share. In emerging markets like India and the Middle East, the budget-friendly model fueled double-digit iPhone growth, offsetting declines in China and Europe. However, its lack of AI features in China until 2025’s Q2 limited its impact there.

What’s Next for Berkshire and Apple?

For Berkshire, the Apple stake now represents 23% of its portfolio, down from 50% in 2023. This diversification has made room for new bets, such as a $916 million position in Constellation Brands and expanded stakes in oil majors. Yet Apple remains its largest holding, suggesting Buffett still sees long-term value in the company’s ecosystem and innovation pipeline.

Apple, meanwhile, faces a pivotal year. Its AI strategy—centered on in-house silicon and the Apple Intelligence platform—will be critical. The delayed rollout in China and the iPhone SE 4’s success in low-cost markets hint at a two-pronged approach: leveraging premium services in mature markets while capturing growth in emerging regions.

Conclusion: A Strategic Shift, Not a Mistake

Berkshire’s Apple sales were neither a perfect exit nor a misstep. The reduction reflected Buffett’s core principles: avoid overvalued stocks, manage tax liabilities, and diversify risk. While Apple’s stock rebounded post-sales, the strategic rationale—reducing a single holding from 50% to 23% of the portfolio—was sound.

For Apple, the path forward hinges on executing its AI vision, sustaining services growth, and navigating geopolitical headwinds. If it can replicate the iPhone SE 4’s success in emerging markets while reigniting iPhone demand in China, it could justify its high valuation.

As for Berkshire, its $334 billion cash war chest positions it to pounce on undervalued opportunities—a luxury afforded by disciplined exits like its Apple sales. The next chapter will test whether Buffett’s timing was just prudent, or if it missed the tail end of Apple’s next big leap.

In the end, both companies are betting on their strengths: Berkshire on cash and diversification, Apple on innovation and global reach. The stakes are high, but the groundwork is laid.