With Berkshire owning about 6% of the tech giant, the conglomerate's stake in Apple is worth a staggering $174 billion, making it the second-largest shareholder behind Vanguard.

Buffett, famously known as a self-proclaimed Luddite, admitted in 2023 that he didn't fully understand Apple's iPhone but recognized the power of consumer behavior. He saw how devoted Apple users were to their devices and the company's ability to keep customers within its ecosystem. This confidence in Apple's loyal customer base paid off handsomely for Berkshire, as the firm has witnessed a nearly 620% return on its investment since 2016.

The annual Berkshire Hathaway shareholder meeting held in Omaha, Nebraska, will likely revolve around the soaring success of their investment in Apple. Despite recent reports of a 10% YoY decline in iPhone sales and a 4% drop in total revenue for Apple, the tech giant's stock experienced its best day since 2022. This surge can be attributed to a $110 billion stock buyback plan and increased margins from a growing services business.

Buffett's conviction in Apple has been unwavering, referring to the company's position with consumers and its extraordinary consumer franchise. Apple boasts an impressive 94% customer loyalty rate, with 9 out of 10 U.S. iPhone owners choosing to stick with Apple when upgrading their devices, according to Consumer Intelligence Research Partners.

Additionally, Buffett highlighted Apple's ability to return billions of dollars to shareholders annually through share buybacks and dividends, a capital allocation strategy that he himself may have influenced. Apple CEO Tim Cook sought Buffett's advice in 2016 on returning cash to shareholders, recognizing Buffett as the natural person to turn to for unbiased guidance.

Despite regulatory pressures surrounding technology mega-cap companies, Buffett still sees the power in Apple's moat, a term he often uses to describe his preferred businesses. However, he did trim Berkshire's stake in Apple by about 1% last year amidst concerns of declining revenue and increased competition from the likes of Microsoft and Google in artificial intelligence.

While regulatory hurdles may pose future challenges for Apple, analysts believe that the Department of Justice lawsuit alleging illegal barriers to competition won't significantly threaten the strength of Apple's ecosystem. Following Buffett's investment strategies, including adding to the Apple position when it's relatively cheap, has proven to be a solid strategy for investors.

Buffett's appreciation for Apple's capital-return strategy was evident during the annual meeting, where he praised the company's decision to expand its stock repurchase program. Apple also increased its dividend by 4%, signaling its commitment to lifting it annually. Buffett emphasized that these actions would result in Berkshire Hathaway owning a bigger piece of the Apple pie over time.

With Apple's continued success and the immense profits it has brought to Berkshire Hathaway, Warren Buffett's investment in the tech giant stands as a testament to his keen understanding of consumer behavior and his ability to recognize the power of a beloved brand.