Berkshire Hathaway Inc., the esteemed conglomerate, has recently reduced their stake in Apple Inc. by almost 50%. This decision was part of a large-scale selling spree in the second quarter, leading to Warren Buffett‘s cash pile reaching a record $276.9 billion.
Second Quarter Sell Off
In the second quarter alone, Berkshire sold off $75.5 billion worth of stock on a net basis. The Omaha, Nebraska-based conglomerate reported a rise in operating earnings to $11.6 billion, an increase from the previous year’s $10 billion.
With a significant amount of cash at its disposal, Berkshire has found it challenging to find worthwhile investments in the current slow deal environment. At the recent annual shareholder meeting in May, Buffett mentioned he wasn’t in a rush to spend “unless we think we’re doing something that has very little risk and can make us a lot of money.”
Buffett’s decision to sell shares coincided with the S&P 500 stock index rally, which reached a record high in mid-July. However, the index has since seen a decrease over the past three weeks due to concerns that the enthusiasm over artificial intelligence was overblown. The S&P dipped by 1.8% on Friday following weak labor data, revealing the risk of an economic downturn.
Stake in Bank of America
Regulatory filings indicate that Berkshire also reduced its stake in Bank of America Corp. in the second quarter, reporting a $41.1 billion stake. Additionally, Berkshire repurchased about $345 million of its own shares during the quarter, the lowest amount since the company changed its buyback policy in 2018.
Apple’s Performance in China
Apple, based in Cupertino, California, reported this week that sales to China fell 6.5% to $14.7 billion in the third quarter, missing the $15.3 billion projection from Wall Street. This outcome has reignited concerns that Apple is losing its foothold in one of its most important overseas markets. Apple faces fiercer competition in the region and has had to adapt to the government’s restrictions on the use of foreign technology in some workplaces. Additionally, China’s economic growth has further declined.
Apple attributed much of the decline to the effects of a strong dollar, stating that the underlying business in China is healthier than before. Three months ago, executives expressed that the slowdown was less about the underperformance of the iPhone and more about weak sales of other products.
Apple’s AI Technology
Despite these challenges, Apple’s shares have gained this year, buoyed by investors’ hope that new AI technology would help boost sales. However, on July 28, Bloomberg News reported that Apple’s upcoming AI features will arrive later than anticipated. They will miss the initial launch of the new iPhone and iPad software overhauls, but this delay will allow the company more time to fix bugs.
The company plans to roll out Apple Intelligence to customers through software updates by October, according to sources with knowledge of the matter.
