Buffet Holds Shares in Four Companies Valued Over a Trillion Dollars Each. Here's the Top Pick Among Them.
Certain clubs have numerous participants. Others are more exclusive. But few are as hard to gain entry into as the $1 trillion club. To be inducted, a company needs to possess a market value consisting of 13 digits.
Currently, only six companies trading on U.S. stock exchanges belong to this exceptionally elite group. At one point this year, Berkshire Hathaway was among them, but it's no longer a member. However, Warren Buffett holds stakes in four of the $1 trillion club's members.
Buffett's prominent $1 trillion investments
Which company most closely associates with Buffett in the $1 trillion club? It's Apple (AAPL -1.32%). Apple's market value reaches nearly $3.4 trillion. Apple and Nvidia are in a close race to be the world's largest company based on market value.
Buffett appears to be less enamored with Apple these days. Berkshire recently publicized that it sold an additional 100 million shares of the stock during the third quarter of 2024. Despite this, Apple remains Berkshire's largest holding, accounting for 23.4% of Berkshire's portfolio.
Amazon (AMZN -1.45%) is also easily spotted as a Buffett pick in the $1 trillion club. Its market value stands at $2 trillion. Amazon isn't a major holding for Berkshire, accounting for only 0.7% of its portfolio. Nonetheless, Berkshire's stake in Amazon is substantial, worth nearly $2 billion with its 10 million shares at the end of the second quarter of 2024.
Buffett didn't personally choose to invest in Amazon. He informed CNBC in a 2019 interview that "one of the insiders in the office managing money" (a reference to either Todd Combs or Ted Weschler) initiated Berkshire's position in the e-commerce and cloud services giant.
Two additional unpublicized investments
If you only examine Berkshire Hathaway's 13F regulatory filings, you might believe that Apple and Amazon are the only members of the $1 trillion club in which Buffett has a stake. However, Buffet has a "secret portfolio" that includes two other stocks with a market value exceeding $1 trillion.
I'm referring to the investment portfolio managed by New England Asset Management (NEAM). This asset management services company was acquired by General Reinsurance Corporation in 1995. Berkshire Hathaway then acquired General Re in 1998. Although Buffett doesn't influence NEAM's investment decisions, he owns any stock in NEAM's portfolio.
NEAM owns 10,540 shares of Microsoft (MSFT -1.73%). Microsoft's market value of over $3 trillion ranks it third behind only Apple and Nvidia.
Buffett has admitted in the past that he made a mistake by not investing in Google, which is now part of Alphabet (GOOG -1.55%) (GOOGL -1.45%). However, NEAM rectified his error. The Berkshire subsidiary owns 7,560 class A shares of Alphabet, which has a market value of over $2 trillion.
The standout choice
Which of Buffett's four stocks that are members of the $1 trillion club outshines the others right now? I'm partial to all of them, but one particularly stands out.
Apple's new generative AI functionality, referred to as Apple Intelligence, could potentially kick off a multi-year iPhone upgrade surge. However, Apple doesn't yet qualify as the best. Its return to strong growth remains to be seen.
Microsoft's partnership with OpenAI has positioned it as a key player in the AI race. I'm uncertain, though, if Microsoft can deliver enough growth over the next year to surpass the other three stocks on our list.
Alphabet is a strong contender. Google Search and YouTube continue to dominate their markets. The Google Cloud unit is thriving. Self-driving car unit Waymo has a massive opportunity as the robotaxi market expands. My primary concern with Alphabet is the antitrust lawsuits that loom over the company like a dark cloud.
That leaves my top pick as the best of the bunch: Amazon. Amazon Web Services (AWS) remains the leader in the rapidly growing cloud services market. AWS should have excellent growth prospects over the next decade and beyond. Amazon leads the e-commerce market but still has numerous growth prospects ahead. Like Alphabet, Amazon has another potential avenue for growth in the robotaxi market through its Zoox business.
What I admire most about Amazon, though, is its free cash flow. The company generated a staggering $47.7 billion of free cash flow over the 12 months ending Sept. 30, 2024. This represented a year-over-year increase of 123%. If Amazon can maintain or even boost its free cash flow at this rate (and I believe it will), this Buffett stock should be able to join Apple, Nvidia, and Microsoft in the $3 trillion club in the near future.
In the context of Buffett's investments, he holds stakes in four companies with a market value of over $1 trillion, including Apple, Microsoft, Alphabet, and one other unnamed company managed by New England Asset Management, which is a subsidiary of Berkshire Hathaway.
Buffett's top pick among his $1 trillion club investments is Amazon, largely due to its strong performance in the cloud services market with AWS and its potential in the robotaxi market. The company's impressive free cash flow growth is another key factor contributing to its status as Buffett's favorite.
