40% of Warren Buffett's $379 Billion Portfolio Is Invested in Only 1 Stock

Core Insights - Warren Buffett's investment in Apple has yielded significant returns, with shares increasing by 631% from early 2016 to May 2023, making up 40% of Berkshire Hathaway's portfolio [1][4] Group 1: Investment Rationale - Buffett was attracted to Apple due to its strong consumer brand, which enhances pricing power and customer loyalty, leading to a gross margin of 40% in fiscal 2015 [2][3] - Apple's financial health was robust, with $216 billion in cash and equivalents against $56 billion in long-term debt as of December 2015, and a 30% operating margin in fiscal 2015 [3] Group 2: Current Valuation and Growth Prospects - As of now, Apple has a market cap of $2.9 trillion and trades at a P/E ratio of 29.7, significantly higher than its trailing-10-year average, suggesting it may not be a good buy at current valuations [5] - Apple has experienced a year-over-year revenue decline in five of the last six fiscal quarters, with projected sales growth of only 4.6% annually through fiscal 2026 [5][7] - The iPhone, which accounts for half of Apple's revenue in Q1 2024, is in a mature stage, making it challenging to encourage upgrades unless a groundbreaking product is introduced [6][7]