Bigfoot exists. Spring will arrive early if the groundhog doesn’t see his shadow on Feb. 2. Warren Buffett doesn’t like tech stocks.
At least one of the three previous statements is irrefutably a myth. Buffett doesn’t have the aversion to tech stocks that some people think he has. How can we know this for certain? Nearly 43% of Buffett’s Berkshire Hathaway (BRK.A 0.01%) (BRK.B -0.57%) portfolio is invested in these five tech stocks.
1. Apple
Apple (AAPL 1.37%) dispels the myth about Buffett and tech stocks all by itself. It’s by far Berkshire Hathaway’s largest equity holding. Including shares owned by Berkshire subsidiary New England Asset Management, Apple makes up 38.4% of Berkshire’s total portfolio.
Don’t be surprised if that stake grows larger. Buffett bought more Apple shares in the first half of 2022 when the stock was priced higher than it is now. It’s almost certainly one of the stocks he’s buying this year.
2. Taiwan Semiconductor Manufacturing
Buffett bought a boatload of shares of a chip giant last year. Until the third quarter of 2022, Berkshire did not have a position at all in Taiwan Semiconductor Manufacturing (TSM -0.16%). Today, it makes up 1.6% of Berkshire’s portfolio. That ranks Taiwan Semi as the conglomerate’s ninth-largest holding.
Strong moats have always been attractive to Buffett. Taiwan Semi certainly has one. The company makes most of the world’s advanced chips, with a who’s who list of customers including Apple.
3. Activision Blizzard
Playing bridge is more up Buffett’s alley than playing Call of Duty. But that hasn’t stopped the legendary investor from buying a major video game stock. Activision Blizzard (ATVI 1.34%) makes up 1.3% of Berkshire’s portfolio, putting the stock just outside Berkshire’s top 10 holdings.
Berkshire initiated its position in Activision Blizzard before Microsoft announced plans to acquire the game developer. That deal appears to be on thin ice now, though, with government regulators threatening to block the takeover.
4. HP
HP (HPQ 0.76%) ranks just behind Activision Blizzard as Berkshire’s twelfth-largest holding. The computer and printing solutions giant comprises 1% of Berkshire’s total portfolio.
That percentage includes shares owned by New England Asset Management. The Berkshire subsidiary appears to be especially bullish about HP, with the stock making up nearly 7% of its investment portfolio.
5. Verisign
Only one other tech stock cracks Berkshire’s top 20. The conglomerate owns over 12.8 million shares of Verisign (VRSN 0.29%). The provider of domain name registry services and internet infrastructure makes up 0.8% of Berkshire’s total portfolio and ranks No. 17 among its largest holdings.
As mentioned earlier, Buffett likes strong moats. He no doubt loves Verisign’s business. The company is the exclusive internet registry for all .com, .net, and .name domain names and provides registry services for other popular domain names as well. Verisign also operates two of the world’s 13 internet root servers.
Should these stocks make up a big chunk of your portfolio?
Just because Buffett owns these five tech stocks doesn’t mean that every investor should. Your investing objectives could be quite different from his. That being said, there’s something to like about each of these stocks.
Apple’s iPhone ecosystem seems unstoppable. The company should have solid growth prospects as it expands into augmented reality and virtual reality.
The demand for chips, although volatile, should rise steadily over the long run. That should bode well for Taiwan Semi’s fortunes.
Activision Blizzard could be in for choppy waters with regulatory objections to Microsoft’s acquisition. However, the video game market should grow nicely over the next decade and beyond.
Investors who love reliable cash flow should continue to like Verisign. Income investors will no doubt like HP’s dividend yield of nearly 3.7%.
The bottom line is that any of these stocks could be good picks, depending on your specific investing goals. Make your own decision — maybe as you’re searching for Bigfoot and waiting for the groundhog to see its shadow.
Keith Speights has positions in Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Activision Blizzard, Apple, Berkshire Hathaway, HP, Taiwan Semiconductor Manufacturing, and VeriSign. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway, long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway, short January 2023 $265 calls on Berkshire Hathaway, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.