So much for bad press hurting the tech sector. It looks like investors’ love affair with Apple is still going strong. As Warren Buffett’s Berkshire Hathaway bought more shares from the iPhone maker. Impressive right? #it’s been a great month for Apple.
Apple is basking in the afterglow of Warren Buffett’s ringing endorsement.
The stock hit an all-time high Monday, and the company moved closer to a milestone – the first $1 trillion market value. Apple stock surged on Friday, when Buffett revealed on the eve of the Berkshire Hathaway annual shareholder meeting that Berkshire had acquired 75 million more shares.
Buffett revealed the massive purchase to CNBC, two days ahead of Berkshire Hathaway’s annual shareholders meeting.
“It is an unbelievable company,” Buffett said. “If you look at Apple, I think it earns almost twice as much as the second most profitable company in the United States.”
Berkshire is due to release its quarterly earnings report on Saturday, where investors will be able to peruse the fund’s top 10 largest holdings. Buffett said the enhanced position would be obvious to those following along.
The huge first quarter purchase is thought to bolster the 165.3 million Apple shares Berkshire owned at the end of 2017. If the fund held its position, as the report suggests, the resulting 240.3 million shares were worth about $42.5 billion at the end of trading on Thursday.
Though he initially shied away from tech stocks, Buffett can be considered a convert, at least in the case of Apple. The “Oracle of Omaha” was first brought into the company in 2016 with a share purchase worth about $1 billion. He extended that position to 57.4 million shares worth about $6.64 billion at the end of 2016, only to raise Berkshire’s stake to 133 million shares a quarter later.
The Oracle of Omaha’s company owns more than 240 million shares of Apple, about a 5% stake. Shares of Apple rose nearly 2% more on Monday. The company is now worth more than $940 billion. The company wowed Wall Street with better than expected profits on May 1, even as it reported that iPhone sales have slowed in the United States. Sales in China and Japan grew dramatically.
Apple also showered investors with plans for a huge stock buyback program, which should boost earnings per share, and a dividend increase. Apple’s stock is up 13% in May.
The Apple rally has been good for the rest of tech as well. Apple may be the first US company to reach a vaunted $1 trillion market cap. But three others may not be far behind. Microsoft and Alphabet, the owner of Google, are each worth about $750 billion. And Amazon is now valued at more than three quarters of a trillion dollars. Even Facebook, which took a hit from the Cambridge Analytica data scandal, is worth $515 billion – less than 10% below its all-time high from earlier of this year.
News of Buffett’s big bet on Apple arrives just two days after the Cupertino tech giant posted its best March quarter ever, reporting revenue of $66.1 billion on 52.2 million iPhone sales. Leading up to the earnings report, analysts cast doubt on the company’s decision to market a $1,000 smartphone in iPhone X. Critics were silenced when CEO Tim Cook noted — multiple times — during an ensuing earnings conference call that the flagship handset outsold all other iPhone models since its launch in November.
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