Please ensure Javascript is enabled for purposes of website accessibility

3 Big Trends Buffett Sees in the Stock Market

By Motley Fool Staff – May 14, 2017 at 2:02PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When the Oracle of Omaha speaks, it can pay to listen.

Warren Buffett is known as the "Oracle of Omaha" for his incredible ability to see opportunity (and threat) before other investors catch on. He was asked about a variety of trends at the Berkshire Hathaway (BRK.A 0.32%) (BRK.B 0.41%) annual meeting in May, and he particularly focused on AI, changing energy production, and driverless cars. Here are the key takeaways.

A full transcript follows the video.

10 stocks we like better than Berkshire Hathaway
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Berkshire Hathaway wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of May 1, 2017

This video was recorded on May 8, 2017.

Gaby Lapera: The other thing he talked a little bit about during the conference was big trends he had noticed, and one in particular that could be a threat to Berkshire Hathaway, which is driverless cars, which you might not initially think of as a threat to Berkshire, but if you think about it, they make a ton of money off of Geico. That's where they get their float to invest things. If you have driverless cars, people need less insurance.

Michael Douglass: Yes. If they -- driverless cars -- make the world safer, it's going to be a very good thing. But it won't be a good thing for auto insurers like Geico. That's definitely a threat. Of course, on the flip side -- and he highlighted another threat, actually, to Berkshire's business, BNSF, the freight railroad, that, basically, coal is on a long-term decline. People talk about bringing coal back, but economically speaking, it appears that it's just not going to happen over the long term. Freight railways like BNSF are going to suffer as a result, and they are looking for other things to carry instead of coal. So that's going to be an issue too. On the flip side, there were some positives. One thing he highlighted was AI [artificial intelligence]. He said he sees a lot of real opportunity in AI. Does that mean Warren Buffett is going to invest in AI? I don't know, you don't know, nobody knows. Warren Buffett probably doesn't know right now. But you can think about a lot of really good implications there for insurance. Imagine if your actuarial tables are built out by a computer that is able to find a little bit more efficiency than the average human being. There's a lot of opportunity if used correctly. He was definitely very bullish on it as a concept in the coming decades.

Lapera: Definitely. Actually, just to get back to the coal thing really quick, even though he's not very bullish on coal, he is pretty bullish on renewable energy, right? And they're making some investments in that space.

Douglass: Incredibly. It's Berkshire Hathaway Energy; they are a big wind and solar provider. Or a big wind provider. 

Gaby Lapera has no position in any stocks mentioned. Michael Douglass owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.