Apple’s resilience: Why the stock remains Buffett’s crown jewel

Warren Buffett isn’t known for chasing hype. The legendary investor built his empire on steady, long-term bets on quality businesses-not fleeting trends. Yet, even as Buffett trimmed some of his major holdings in banking and consumer stocks, he left Apple (AAPL) untouched in the final months of 2024.

Apple now makes up 28% of Berkshire Hathaway’s portfolio, and its stock value rose by more than $5 billion in the fourth quarter alone. That raises a crucial question: What makes Apple such an exceptional investment, even as Buffett sheds other long-standing positions?

A safe haven amid market uncertainty

Buffett began reducing his stake in Bank of America in mid-2024, bringing it down to 8.9% by year’s end. He also significantly cut his Citigroup holdings and fully exited Ulta Beauty. Meanwhile, Apple remained a cornerstone of Berkshire’s portfolio. This move reflects a larger shift in market confidence.?

While traditional sectors like banking face headwinds from interest rate uncertainty and regulation, big tech has remained a stronghold for investors. Apple, in particular, has proven its ability to weather economic cycles, largely thanks to its massive ecosystem of devices and services. Even when iPhone sales declined 1% in Q4, the stock continued to climb, reinforcing investor belief in Apple’s long-term strength.?

From hardware to recurring revenue

Apple is no longer just a hardware company. Over the last decade, it has transformed into a powerhouse of recurring revenue, with services playing an increasingly vital role in its financial performance. Its ecosystem of subscriptions-including the App Store, Apple Music, iCloud, and Fitness+-ensures that revenue continues to flow long after a customer purchases an iPhone or Mac.

With over two billion active Apple devices in use globally, this shift to services has made Apple’s revenue stream more predictable and resilient.

Even during periods of slower device sales, the company benefits from ongoing payments from its loyal customer base. This transition is evident in Apple’s earnings reports, where services have steadily grown as a percentage of total revenue.

A chart depicting Apple’s services revenue growth over the past five years would showcase this trend, emphasizing how the company has successfully diversified beyond hardware.

AI, custom chips, and the next phase of growth

Beyond its current financial strength, Apple’s future growth is fueled by its deep investment in artificial intelligence and custom silicon. Apple Intelligence, its proprietary AI initiative, is expected to drive demand for future iPhone upgrades, much like the transition to 5G did in previous years.?

The company’s decision to move away from Qualcomm’s chips and build its own processors further strengthens its position, improving efficiency, security, and cost control.

Apple’s strategy contrasts sharply with many tech companies that prioritize aggressive expansion at any cost. Instead, Apple’s focus remains on innovation that enhances efficiency, user experience, and profitability. Its ability to maintain premium pricing, high customer retention, and industry-leading margins, over the past decade, makes it a unique force in the market-with this trend likely to continue.

The Berkshire seal of approval

Buffett’s decision to hold onto Apple while reducing financial stocks speaks volumes. As a long-term investor who values stability and strong cash flow, his continued commitment to Apple suggests that the company is not just another tech stock-it is a strategic asset.?

Apple’s ability to generate massive cash reserves, expand its service-driven ecosystem, and stay ahead in AI and chip innovation makes it a rare breed: a tech company with blue-chip stability. For investors wondering whether Apple is still worth holding, the answer seems clear. If it remains Buffett’s crown jewel despite major shifts in his portfolio, it is certainly worth a second look.?

Technical outlook: Will the stock test $260?

At the time of writing, the stock was touching highs of $244, close to previous highs of $247.14. Upward bias is clearly evident looking at recent performance- as the stock remains high above the moving average. However, RSI looking flat above the midline hints at slowing momentum which could hold the stock from reaching higher highs.

Upside levels to watch are previous highs of $247.14 and $253.19 which could hold price again, and on the downside, prices could be held at the $233.49 and $227.57 support levels.

Disclaimer:

The information contained within this blog article is for educational purposes only and is not intended as financial or investment advice.

No representation or warranty is given as to the accuracy or completeness of this information.?

We recommend you do your own research before making any trading decisions.

This information is considered accurate and correct at the date of publication. Changes in circumstances after the time of publication may impact the accuracy of the information

The performance figures quoted refer to the past, and past performance is not a guarantee of future performance or a reliable guide to future performance