Warren Buffett's holding company Berkshire Hathaway submitted its 13F filing to the Securities and Exchange Commission on Feb. 14, giving investors insight into the Oracle of Omaha's investing moves during the fourth quarter of 2022.
While Berkshire didn't initiate any positions during the quarter, it did add to its existing holdings in certain companies. Apple (AAPL 1.27%), which is Berkshire's largest holding at 41.4% of the total portfolio, was one of those stocks. Berkshire added roughly 334,000 shares of Apple during the quarter.
Meanwhile, Berkshire slashed its position in multiple companies, but it continues to hold a stake in Snowflake (SNOW 2.53%), a cloud platform provider that is sitting on a huge addressable market.
If you have $1,000 to spare -- which means you don't have any high-interest credit card debt, your bills are paid, and you have enough saved for a rainy day -- then you might want to buy these Buffett stocks. Here's a closer look at what makes each appealing.
1. Apple
Shares of Apple have rallied strongly in 2023 so far, gaining 19%. That's despite weak fiscal 2023 first-quarter results (for the period ending Dec. 31), which revealed a slide in revenue and earnings.
Quarterly revenue was down 5.5% year over year to $117 billion. Earnings shrunk to $1.88 per share from $2.10. The numbers missed Wall Street's expectations for $1.94 per share in earnings on $121.1 billion in revenue.
Apple's poor performance last quarter can be attributed to the weakness in smartphone sales. Market research firm IDC estimates that global smartphone sales plunged 18.3% year over year in the fourth quarter of 2022 to 300.3 million units. Apple's shipments dropped nearly 15% year over year to 72.3 million units.
As a result, iPhone revenue dropped an estimated 8.2% over the prior-year period. Given that the device generated 56% of Apple's top line last quarter, the weak sales of its flagship product weighed heavily on its performance. But a turnaround in 2023 is certainly possible. IDC believes that global smartphone sales might recover 2.8% in 2023 following an 11.3% drop in 2022.
Although IDC maintains that its projection could be hampered by inflation and macroeconomic concerns that may weigh on consumer spending, I have faith in the recovery narrative. After all, inflation is cooling, with the U.S. Department of Labor indicating a 6.4% year-over-year increase in the consumer price index (CPI) in January 2023 compared to 9.1% in June 2022. And Goldman Sachs expects inflation to cool further to 3.1% in the fourth quarter of 2023.
Meanwhile, the International Monetary Fund (IMF) now expects the U.S. economy to grow 1.4% in 2023 compared to its prior forecast of 1%. IMF also bumped its global growth forecast to 2.9% from 2.7%. Combine this expected growth with cooling inflation and consumer spending could increase leading to even stronger growth this year. In other words, while there are certainly plenty of challenges ahead, a recovery for Apple could be on the way in 2023.
Likewise, an acceleration in 5G smartphone shipments could be another tailwind for the company this year. The daily newspaper DigiTimes forecasts that 5G smartphone sales could clock 20%-plus growth in 2023 following a 15% increase in 2022. And Apple controlled over 29% of the 5G smartphone market last year.
The company is also expected to move into a new market this year. It will reportedly release its mixed-reality headset (allowing users to interact with both physical and virtual items and environments) in June, according to Bloomberg. The device is expected to cost around $3,000. While that's steep, Apple could introduce a budget version of the device in early 2024.
The company's move into mixed reality could unlock a huge opportunity. Mordor Intelligence estimates that this market could clock annual growth of 41.8% through 2028, driven by its adoption in education, defense, and industry.
So it won't be surprising to see an acceleration in Apple's growth in 2024 and 2025 following a down year in fiscal 2023, when its revenue is expected to drop by 1.5% to $389 billion.
AAPL Revenue Estimates for Current Fiscal Year data by YCharts.
In all, a potential recovery in smartphones, a move into new markets, and the solid health of its services business could be tailwinds for Apple as the year progresses. That might explain why Buffett bought the stock. And you can consider doing so, too, if you have $1,000 in investable cash.
2. Snowflake
Snowflake's impressive growth and the size of its addressable opportunity make this cloud stock an attractive bet. The stock was severely punished in the 2022 sell-off. But better times look to be ahead thanks to the emergence of new catalysts and the strength of its existing markets.
Among other services, Snowflake provides data warehousing, data mining, machine learning (ML), and cybersecurity through its cloud-based platform. The company estimates that it has a total addressable market of $248 billion, which could expand further thanks to the growing popularity of generative artificial intelligence (AI), used in applications such as chatbots.
For example, OpenAI's chatbot ChatGPT was fed with 570 gigabytes of text data from various sources on the internet, including books, articles, blog posts, and Wikipedia. That allows ChatGPT to provide conversational responses using 300 billion words that have been fed into the chatbot.
Snowflake allows customers to access a massive global data network from a single access point, thereby reducing the time required to look for specific data. As a result, the demand for Snowflake's offerings should increase with a jump in the adoption of generative AI solutions.
Generative AI is expected to produce 10% of all the data produced globally by 2025 compared to only 1% at present, according to Gartner.
These AI applications can create images, text, audio, video, and even code based on user inputs. So they need quick access to massive amounts of data, and this is where Snowflake could step in. It allows users to store filtered data for future analysis (data warehousing), study massive amounts of information to generate meaningful insights (data science), and store unfiltered data in "data lakes."
This end-market opportunity is why Snowflake is forecast to clock powerful growth. The company will release its fiscal 2023 results on March 1, and it is expected to end the year with a 68% spike in revenue to $2 billion. More importantly, its top line is anticipated to head significantly higher in the coming years.
SNOW Revenue Estimates for Current Fiscal Year data by YCharts.
So investors looking to buy a growth stock from Warren Buffett's Berkshire portfolio might try Snowflake if they have $1,000 to spare based on its impressive long-term upside.
