I don't think many investors out there question that Apple (AAPL -0.49%) is one of the best companies in the world. Its incredible track record of innovation has resulted in tremendous financial success, leading to a current market cap of $2.8 trillion. 

Berkshire Hathaway, led by legendary investor Warren Buffett, first purchased shares of the tech giant in the first quarter of 2016, a decision that has proved to be remarkably lucrative. Since the start of that year to Sept. 8 of 2023, Apple's stock has soared 577%. This gain beats the Nasdaq Composite Index's 175% rise during the same time. Today, Berkshire holds a $164 billion stake, so the iPhone maker represents 46% of its entire public equities portfolio. 

Let's look at some possible reasons why Buffett was probably first interested in this FAANG stock and consider whether investors should buy in right now. 

Loyal customers 

Take a peek at Berkshire's portfolio, and it's easy to see that he loves companies that possess a strong brand. Some of the top holdings are American Express, Coca-Cola, and Kraft Heinz. But perhaps no business has as powerful of a brand as Apple. According to Interbrand, Apple's brand is the world's most valuable, worth $482 billion. 

Selling incredibly popular hardware products, most notably the iPhone, and combining them with easy-to-use software, has created a sticky ecosystem that leads to customer loyalty and high switching costs. Even Buffett understands this dynamic. He recently posited that if someone was offered $10,000 to never use an iPhone again, they would turn down this deal. 

Strong financials 

Finding companies that are in great financial shape is also important for Warren Buffett. It's not hard to see why this is a top priority. Just look at the past couple of years. The macroeconomic situation is entirely unpredictable, so it's smart to own businesses that can handle whatever happens with interest rates or inflation. 

Apple generated $277 billion of free cash flow in the three-year period between fiscal 2020 and 2022. And the company currently has a net-cash position of $57 billion on its balance sheet. This kind of financial strength, which adds peace of mind to one's portfolio, is what investors should look for. 

Cheap valuation 

Buffett likes to own great businesses but only if the price is right. Even the best companies, those with wide economic moats and solid growth prospects, can make for terrible investments if the valuation at purchase is excessive. Therefore, it's always a good idea to seek a margin of safety. 

Apple fell squarely in this category in early 2016. During the first quarter of that year, the tech stock's average trailing-price-to-earnings (P/E) ratio was just 10.6, so the market wasn't too optimistic about the business at the time. That is a ridiculously low valuation to pay for such a dominant company. 

Is Apple a good investment right now? 

While buying Apple stock in early 2016 has clearly proved to be a smart decision for Buffett and Berkshire Hathaway, the question today centers on if this is a good investment to make right now. There are two primary reasons to hesitate before rushing to add this tech behemoth to your portfolio. 

The first is that Apple is already a gargantuan enterprise. Its trailing-12-month revenue totaled close to a staggering $400 billion. Additionally, there are more than 2 billion active Apple devices in the world, according to CFO Luca Maestri. I believe it's totally reasonable to wonder how much growth this business has left in the tank as we look toward the next five to 10 years. In fact, in each of the past three quarters, revenue dropped on a year-over-year basis. 

It's also worth closely looking at the current valuation. Apple trades at a trailing-P/E ratio of 30 today. That's about three times more expensive than when Buffett first got in. With decelerating growth on the horizon, it's easy to get discouraged when thinking about where the market-beating returns could come from. 

While Buffett's Berkshire Hathaway remains a large shareholder, investors who are on the sidelines need to think twice before taking a bite out of Apple stock today.