In the second quarter, Warren Buffett's Berkshire Hathaway sold 20 million shares of Apple (AAPL +2.34%). While it remains the largest holding in the company's $313 billion portfolio, Buffett has now sold 625 million shares since late 2023, representing approximately 70% of the position.
Meanwhile, Buffett started a brand new position in UnitedHealth Group (UNH +0.96%), a company whose stock has surged 5,600% over the last three decades, yet currently trades 42% below its record high.
Here's what investors should know.
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Apple: The stock Warren Buffett sold in the second quarter
Apple has cultivated a reputation for premium consumer electronics devices due to engineering expertise that spans hardware, software, and services. Particularly important is its ability to design custom semiconductors, which improve performance and power efficiency across its iPhone, iPad, and Mac products, and help the company control costs.
Apple accounted for 43% of smartphone sales in the second quarter, nearly three times more than its closest competitor Samsung. But the company also has a strong presence in personal computers, smartwatches, and tablets, and its ability to provide a seamless user experience across devices keeps consumers loyal and affords the company immense pricing power.
However, Apple's execution has been very disappointing where artificial intelligence (AI) is concerned. The introduction of Apple Intelligence (AI features for newer iPhone and Mac models) has so far failed to catalyze the upgrade cycle so many analysts predicted. And the most anticipated feature (a ChatGPT-like Siri) has been delayed repeatedly and is not expected until the first half of 2026.
Meanwhile, Apple's innovation engine has seemingly stalled. Its last groundbreaking new product was AirPods in 2017. But the company has now gone eight years without a major innovation, the longest stint since the iPod launched in 2002. That is particularly concerning because the stock trades at 40 times earnings, which is very rich for a company whose earnings are projected to grow at 10% annually in the next three years.
Here's the big picture: Apple is an excellent business. But the lack of innovation in recent years, especially with respect to artificial intelligence, and the stock's price tag give me pause. Buffett evidently has a great deal of confidence in the company given that it remains Berkshire's largest holding, but I think investors should avoid the stock until the valuation looks more reasonable.
NYSE: UNH
Key Data Points
UnitedHealth Group: A stock Warren Buffett bought in the second quarter
UnitedHealth Group is a diversified healthcare company that breaks its operations into two segments: (1) UnitedHealthcare provides health insurance to individuals and employers, and it administers Medicare and Medicaid plans; (2) Optum provides medical care services (Optum Health), pharmacy services (Optum Rx), and analytics services (Optum Insight).
That vertical integration gives UnitedHealth a holistic view patients, which theoretically helps control costs for the company and its clients. Morningstar analyst Julie Utterback writes, "Historically, this integrated strategy resulted in some of the best returns in the managed care industry." However, UnitedHealth Group faces several serious problems.
Medical costs and utilization of healthcare services have exceeded expectations, such that the company says it underestimated its expenses by $6.5 billion in 2025. The problem is spread throughout the business: About half of that total comes from Medicare plans, and the rest is split between individual, employer, and Medicaid plans. In turn, earnings fell 18% in the first half of 2025 as its profit margin contracted.
The company is also the subject of several Justice Department probes. The list includes investigations into whether its past acquisitions of doctor groups violated antitrust laws, and whether it deliberately inflated billings in its Medicare Advantage plans. The scope of the second investigation was recently widened to include pharmacy benefit manager Optum Rx. The Federal Trade Commission has also sued UnitedHealth for insulin price manipulation.
Here's the big picture: UnitedHealth Group shares currently trade 42% below the record high due to concerns about falling profits and the ongoing investigations. So, despite winning Berkshire Hathaway as a shareholder, I think there are too many unknowns for investors to buy the dip. I would keep this stock on my watchlist until we have more information about the Justice Department probes.
