Recent securities filings have revealed that Berkshire Hathaway has made a massive investment in PC and printer hardware maker HP. With its purchase of roughly 121 million shares, the Warren Buffett-led investment conglomerate immediately became HP's largest shareholder -- with a roughly 11% stake in the business.
While Buffett's big bet on HP is generating lots of headlines and is certainly intriguing, HP is not the only tech stock in the Berkshire portfolio that's worth buying this month. Read on to see why a panel of Motley Fool contributors identified Amazon (AMZN 1.30%), Verizon (VZ 2.85%), and Snowflake (SNOW 2.69%) as top Berkshire-backed technology stocks that are worth buying in April.
Image source: The Motley Fool.
Amazon is at the top of its game
Daniel Foelber (Amazon): Amazon stock fell over 5% last week and is down 17% from its all-time high as broader market volatility clashes with growth concerns and threats of unionization. Amazon, like other companies, is dealing with workers who are petitioning to unionize for better benefits and higher pay. However, Amazon has a history of paying its workers well and was one of the first companies to implement a higher minimum wage. In October 2018, Amazon raised its minimum wage to $15 an hour, which set the tone for many other companies in different industries to follow suit. Given its track record for fair employee compensation, it would seem that Amazon stands a good chance at working with its employees to better address their needs and avoid a hostile outcome.
During raging bull markets, sometimes a company will report a mediocre or even a poor quarter, and the stock will go up anyway. The opposite is true during market sell-offs, when great quarters will often go largely ignored. That's exactly what happened with Amazon's most recent quarter.
The company set a record for the largest market cap gain in a single day on Feb. 4 when its stock price climbed 13.5% after reporting blowout Q4 and full-year 2021 results. However, Amazon stock has since fallen from that surge, giving investors the chance to essentially get some of that good news and guidance at a discount.
Amazon is an excellent company with an incredibly sophisticated supply chain, pricing power, and an absolute cash cow from its high-margin Amazon Web Services business. Buying Amazon stock on sale has been one of the best ways to beat the stock market for about 20 years. There's no reason to believe that trend will change anytime soon.
The right tech in the right place at (almost) the right time
James Brumley (Verizon): I know most people consider it a mere telecom services company, which it is. But one of the things that makes Verizon (VZ 2.85%) one of Berkshire's longer-lived holdings is the fact that the organization ensures the underlying technology that supports its service is second-to-none.
Take the company's 5G network, for instance. For years a wide swath of investors questioned its big investments in fiber optics that -- at the time -- didn't seem worth it. Now it does. As it turns out, there's not enough radio frequency bandwidth to handle the data load being created by millions of wireless devices. Verizon's tech offloads a great deal of that ramped-up data transmission to the company's fiber network.
And it's working. Verizon's network took top honors in last year's review of all U.S. wireless networks by J.D. Power. The company's 5G networking technology is so powerful and high capacity, in fact, that it can be used to offer at-home broadband service as well as turn consumers' smartphones into web-connected devices. Verizon believes it will be able to offer 5G connectivity to 175 million people by the end of this year. The advent of the data-intense metaverse should really flesh out the opportunity.
This of course sets the stage for growth of more than 4% beginning in 2024, and given the company's cadence of dividend growth, there's every reason to expect Verizon to use this growth to support continued dividend increases.
This innovative tech company could crush the market
Keith Noonan (Snowflake): With the company currently unprofitable and sporting a market capitalization of roughly $65.5 billion and trading at roughly 32 times this year's expected sales, it's probably fair to say that Snowflake has one of the more atypical valuation profiles in the Berkshire Hathaway portfolio. On the other hand, I think the stock could deliver massive wins for risk-tolerant investors.
Business operations are increasingly migrating to, and relying on, digital channels, and companies are sorting through massive troves of data with the hope of generating valuable insights. However, in order to get the full picture, it's important to have access to the full data picture. Snowflake provides data-warehousing services that allow businesses to combine information from cloud platforms that are otherwise walled off from each other, and it's helping businesses keep pace with the fast pace of change in the Information Age.
According to various surveys, more than 90% of businesses are already using multiple cloud service providers or otherwise plan to pursue a multi-cloud strategy, and there's an incredibly strong long-term demand outlook for Snowflake's service. In addition to the company's data warehousing offerings, Snowflake also provides a marketplace that allows businesses and institutions to buy and sell data sets, and it looks poised to benefit from a powerful network effect as more users join the service.
The company's revenue skyrocketed 106% annually in 2021 to reach roughly $1.14 billion, and the business actually posted non-GAAP (adjusted) free cash flow of $149.8 million. While Snowflake still has a highly forward-looking valuation, shares trade down roughly 38.5% year to date and roughly 48.5% from the high that they hit last year, and I think the stock has what it takes to deliver huge returns for long-term shareholders.
