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What You Need to Know
- Berkshire Hathaway trimmed its Apple stake by 4.3% in Q4 2025 — its third consecutive quarterly reduction.
- Apple remains Berkshire's largest equity holding at roughly $62 billion, ahead of American Express at ~$57 billion.
- Berkshire has reduced its Apple position by nearly 74% from its 2023 peak of over 915 million shares to approximately 238 million.
- Apple just delivered its best quarter on record: $143.8B in revenue (+16% YoY), EPS of $2.84 (+19% YoY), and operating cash flow of $53.9B — all all-time records.
- Q2 2026 guidance calls for 13–16% revenue growth YoY and gross margins of 48–49%.
- AAPL trades at roughly 34.7x forward earnings — a premium that demands the business keep delivering.
Hey there, bargain hunter.
Every quarter, the same headline lands. Berkshire trims Apple. Markets briefly stir. And then everyone argues about what it means.
Let me offer you a different read.
The Scoreboard
In the fourth quarter of 2025 — the final quarter of Warren Buffett's 60-year tenure as Berkshire CEO — the Omaha conglomerate pared another 4.3% of its Apple position, bringing the holding to approximately $61.96 billion. That follows a 15% cut in Q3 2025, cuts throughout 2024, and the dramatic 50% slash in Q2 2024 that started the whole conversation. From peak to present, Berkshire has reduced its Apple position by roughly 74%, from over 915 million shares at the top to around 238 million today.
And yet — Apple still sits at number one in Berkshire's portfolio. Still worth more than American Express, still worth more than any other single equity bet Greg Abel inherited when he took the CEO chair on January 1, 2026.
That's the first thing the market keeps glossing over.
What the Market Believes
The instinctive read on a Berkshire trim is bearish. Smart money walking. The Oracle quietly sending a message. If the greatest capital allocator of the last half-century is selling Apple, shouldn't you be worried?
That framing sounds logical. It is also largely wrong.
Berkshire was not running a concentrated position — it was running an oversized one. At its 2023 peak, Apple represented more than 50% of Berkshire's equity portfolio and was worth roughly $174 billion. No fiduciary with a brain leaves that concentration intact indefinitely, regardless of how good the underlying business is. This was position management, not a conviction reversal.
The selling also conveniently coincided with Buffett's deliberate push to stockpile cash. Berkshire's U.S. Treasury bill position swelled to over $320 billion. That is not a commentary on Apple. That is a 95-year-old chairman preparing a successor with maximum optionality.
The Friction: What the Business Is Actually Doing
Here is where things get interesting.
While Berkshire has been trimming, Apple delivered its strongest quarter in company history. Q1 fiscal 2026 — the December 2025 quarter — came in at $143.8 billion in revenue, up 16% year over year. Earnings per share hit $2.84, up 19%. Net income reached $42.1 billion. Operating cash flow set an all-time record at $53.9 billion. Every one of those numbers was an all-time record.
The analysts had modeled $138.4 billion in revenue and $2.68 in EPS. Apple beat both by a meaningful margin.
The iPhone led the way — generating $85.27 billion in revenue, up 23% year over year — described on the earnings call as demand that was simply extraordinary. Services hit $30 billion, up 14%, with gross margins on that segment running at 76.5%. The installed base crossed 2.5 billion active devices.
That is not the profile of a business someone is running away from. That is the profile of a business trading at a significant premium because the compounding is real.
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The Core Insight
Here is the shift no one is pricing cleanly: Apple is no longer primarily a hardware company being valued on hardware cycles. It is a platform company with 2.5 billion locked-in devices generating a services stream that runs at 76.5% gross margins — and the market is only beginning to price that transition fully.
Services now contribute roughly 25% of total revenue. The App Store, Apple TV+, iCloud, Apple Music — these are recurring, high-margin income streams that do not require a new chip node or a consumer to upgrade their phone. They compound quietly underneath the headline iPhone numbers.
The coming AI wearables roadmap — smart glasses, AI pendant, upgraded AirPods, the lower-cost iPhone 17e and MacBook — is not just a product story. It is a device-per-customer story. More devices in the ecosystem means more services touchpoints, more subscription attach rates, more lock-in. Apple is widening the funnel precisely as the per-device monetization engine is getting more powerful.
Berkshire selling down a position it held for position-management reasons does not change any of that.
The Valuation Problem
None of this means Apple is cheap. It is not.
At roughly $259 per share and a P/E of 34.7x, Apple trades at a premium to almost every other Magnificent Seven name except Tesla and Nvidia. For a business growing revenue in the mid-to-high single digits in a typical year, that is a lot of faith priced in. Even with the record Q1 print, you are paying for perfection — and perfection leaves very little margin for error on execution, tariff exposure, China headwinds, or an AI rollout that disappoints.
The bull case consensus on Wall Street sits around $300 (median of 77 analysts), with Wedbush's Dan Ives at $350 on the optimistic end and Loop Capital offering a $215 target on the conservative end. That range — from a 17% downside to a 35% upside from current levels — tells you exactly how much depends on whether Apple's AI product cycle lands cleanly.
Management guided Q2 2026 revenue growth of 13–16% with gross margins of 48–49%. That is strong. But memory pricing is rising, supply constraints on 3-nanometer chip production are still real, and the China market remains a geopolitical variable that no model can fully tame.
What to Watch
- Services gross margin trajectory: Currently 76.5%. Any sustained expansion here re-rates the entire business upward. Contraction tells you competitive pricing pressure is arriving.
- iPhone 17e and low-cost MacBook reception: These are the emerging-market and first-time-buyer plays. Volume here expands the addressable base for services monetization. Watch ASP trends alongside unit growth.
- China revenue: Still the single largest geopolitical risk in the model. Any tariff escalation or consumer boycott dynamic in Greater China can materially move the needle on a business this size.
- AI wearables timeline: Smart glasses and AI pendant are on the roadmap. The question is whether they reach meaningful scale in 2026 or push into 2027. Delays compress the multiple. Early traction expands it.
- Berkshire's next 13F: If Greg Abel's Berkshire stabilizes the position rather than continuing to trim, that alone changes the sentiment narrative around the stock.
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Bottom Line
Berkshire trimming Apple is a portfolio management story. Apple delivering record revenue, record EPS, record operating cash flow, and guiding for 13–16% growth into Q2 is a business fundamentals story. The market has spent two years confusing the first for the second.
The real question for AAPL in 2026 is not whether Warren Buffett is selling. It is whether a 34.7x multiple is justified by a business that is accelerating its services flywheel, widening its device ecosystem, and sitting on a 2.5 billion device installed base that its competitors cannot replicate overnight.
If the AI product cycle lands — and the numbers so far suggest it is landing — Apple is not expensive for what it is becoming. If it stalls, that multiple compresses fast and the Berkshire headlines will look prescient in hindsight.
Watch the services margin. Watch China. Watch the wearables rollout. The Berkshire headlines are noise. The data is the signal.
— The Cheap Investor Editorial Team
This editorial is for informational purposes only and does not constitute investment advice, a solicitation, or a recommendation to buy or sell any security. All data referenced is sourced from public filings, earnings releases, and analyst estimates. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Do your own due diligence before making any investment decision.
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