Warren Buffett isn’t what you’d call a tech guru. The legendary investor has been notoriously slow in the past to invest in companies with major technological advances. He readily admits that tech is outside of his wheelhouse.
However, Buffett’s views on artificial intelligence (AI) present a new twist. The Oracle of Omaha is seriously worried about the potential impact of AI. But those worries aren’t stopping him from betting big on it anyway.
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Buffett’s AI concerns
In an interview with CNBC in April 2023, Buffett said that AI is “something I don’t understand at all.” He told a story about how his longtime friend, Microsoft (MSFT -1.66%) co-founder Bill Gates, came by a few months earlier and showed him OpenAI’s ChatGPT.
Buffett was impressed. He told CNBC’s Andrew Ross Sorkin, “I think it’s an incredible technological advance in terms of showing what we can do.” However, he was also concerned.
The 92-year-old multibillionaire reflected back on the creation of the atomic bomb in 1945. He said, “I didn’t know what an atom was or anything, but then Einstein told me it was gonna change the world, and it changed the world.” Buffett added, though, “I don’t want to change the world too many times without knowing — having — some idea of the consequences of it. And this [AI], I think this is extraordinary, but I don’t know whether it’s beneficial.”
Buffett mentioned listening to Eric Schmidt, former CEO and executive chairman of Alphabet (GOOG -1.38%) (GOOGL -1.25%) talk about AI. Schmidt stated that AI scared him. Buffett said that the technology scares him, too. He told Sorkin that he agrees with Schmidt that the development of AI should be paused to consider what consequences it might bring.
How he’s betting big on AI
Even a cursory look at Buffett’s Berkshire Hathaway (BRK.A -0.46%) (BRK.B -0.44%) holdings reveals that he has invested heavily in companies developing AI technology. He isn’t so concerned that he’ll miss out on the opportunity to make money from AI.
Apple (AAPL -0.59%) ranks as the biggest position by far in Berkshire’s portfolio. The company has integrated AI into its products for years. CEO Tim Cook said in Apple’s recent quarterly update that the company sees the potential for AI as “huge.” He added that Apple will “continue weaving it in our products on a very thoughtful basis.”
Berkshire also owns shares of Amazon (AMZN -1.27%). Virtual assistant Alexa is only one part of Amazon’s AI focus. The company has aggressively rolled out multiple new AI applications in recent months.
Buffett’s “secret portfolio” includes even more AI stocks. I’m referring to positions held by New England Asset Management (NEAM), a wholly owned subsidiary of Berkshire Hathaway. NEAM owns shares of Alphabet, Microsoft, and IBM, each of which is focused heavily on AI development.
Climbing a wall of worry
Plenty of other well-known people have expressed concerns about AI in addition to Buffett. Elon Musk and Apple co-founder Steve Wozniak were among more than 1,100 to sign an open letter released in March that called for an immediate pause on training powerful new AI systems.
Are they right to be concerned? Maybe so. But there’s an old saying about the stock market “climbing a wall of worry” that could be relevant in this case. The adage refers to how stocks frequently rise despite a significant level of uncertainty.
AI stocks could continue to climb a wall of worry over the next decade and beyond. Some concerns will likely prove to be overblown. Others might be truly problematic. However, the productivity benefits of AI are simply too huge to pass up.
Buffett doesn’t understand AI. He’s afraid of what consequences it might bring. But he has a sense of how much of a game-changer it could be, too. And he’ll almost certainly continue to profit from it thanks to his investments in Apple, Amazon, Alphabet, IBM, and Microsoft.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Amazon.com, Apple, Berkshire Hathaway, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon.com, Apple, Berkshire Hathaway, and Microsoft. The Motley Fool has a disclosure policy.
