Investors looking for Warren Buffett AI stocks should note that the Oracle of Omaha does not particularly have a keen interest in pure-play AI stocks. That is because his company, Berkshire Hathaway (NYSE:BRK-B), does not maintain meaningful positions in such stocks.
Warren Buffett’s investment style focuses more on well-established businesses for long-term growth. Accordingly, AI doesn’t fit that criterion, as it is still a relatively speculative sector. That said, as we’ve seen this year, it’s also certainly one with lots of room to run.
This investing style doesn’t rule out many companies with significant AI exposure that Warren Buffett’s company has invested in. These companies may not be purely AI-focused, but they are well-positioned to capitalize on the growth and adoption of artificial intelligence.
The following three are such Warren Buffett AI stocks I think are worth considering right now.
Microsoft (NASDAQ:MSFT) is one company that seems to be all-in on artificial intelligence. It started with a $1 billion investment into OpenAI back in 2019, which is now a household name after ChatGPT gained popularity. Then, Microsoft invested another $10 billion into OpenAI in January, and one can only imagine the sort of AI products the company will be able to release in a few years with all the funding.
ChatGPT’s premium subscription model is expected to generate $200 million this year and $1 billion by 2024. The actual number should be much higher if OpenAI decides to introduce ads or disable free access to the chatbot.
So far, OpenAI’s story has just started, and more groundbreaking products will surely come. Indeed, one easy way to invest in the future of OpenAI is by investing in MSFT stock.
Of course, that’s not all there is to Microsoft’s AI venture. ChatGPT’s integration with Bing is another catalyst that has Alphabet (NASDAQ:GOOG) on edge. At the same time, the company’s Azure AI platform offers services contesting the dominance of Amazon’s (NASDAQ:AMZN) Amazon Web Services.
With all that in mind, the question is, how much of the stock does Buffett or Berkshire directly own? None.
Buffett answered this question in his 2018 meeting, saying that investing in MSFT now would be a “mistake due to his close friendship with Bill Gates.” However, Berkshire Hathaway does have a $616 million stake in Markel (NYSE:MKL) and the ownership of New England Asset Management. Both of these companies have positions in MSFT stock.
Lockheed Martin (LMT)
Due to the tense geopolitical climate, Lockheed Martin (NYSE:LMT) is a hot stock. The world’s largest pure-play defense contractor has a massive backlog of $150 billion, up 11% year-on-year. But that’s just the tip of the iceberg, as many NATO and NATO-aligned countries have only recently started to increase their military budgets.
I believe a significant amount of this money will translate into Lockheed Martin’s backlog and become a long-term revenue source for the company.
Investors should note that NATO militaries heavily focus on their air force capabilities, investing heavily in up-to-date military hardware such as drones. These weapons require expensive maintenance and spare parts. Thus, the recent wave of countries increasing their defense spending is the most significant upside catalyst for Lockheed Martin. I may even argue that it is a company that stands to benefit the most from the Ukraine war directly. For such reasons, the New England Asset Management company has increased its stake in LMT by 19% over the last quarter.
As for AI, Lockheed Martin is making full use of this tech. Specifically, Lockheed Martin Ventures invests in AI startups such as Machina Labs and Fiddler. And as per the company’s CEO, “In the fourth quarter, we continue to announce and expand strategic agreements with America’s leading commercial digital companies, such as IBM’s Red Hat, to advance artificial intelligence innovation on Lockheed Martin military platforms…”
Overall, LMT stock is among the top Warren Buffett AI stocks right now.
I wouldn’t have minded putting Nvidia (NASDAQ:NVDA) here a few months ago, but the company’s steep valuation makes me believe the current entry point isn’t worth the risk, even in the long run.
Conversely, Apple (NASDAQ:AAPL) isn’t the flashiest AI stock pick. However, it is a stock that Warren Buffett certainly believes in. Berkshire Hathaway and New England Asset Management have 39% and 49% of their portfolios, respectively, allocated to this stock.
Apple is cautiously playing the AI game, unlike Google, which shot itself in the foot by rushing Bard. It is behind in the AI race right now, but I am confident Apple will be able to catch up in the long-run. Apple bought the most AI companies from 2016 to 2020, buying AI Music and Curious AI within the past two years. Accordingly, I think it makes sense to assume that Apple is far from out of the AI race.
On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.