Warren Buffett Sold Apple Stock, but These Billionaires Are Buying It by the Boatload

Warren Buffett is considered by many as one of the greatest investors of all time. The longevity of his success is remarkable, starting as a public investor in the 1950s after establishing his own investment partnership. As Chairman and CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) , Buffett is in charge of managing the bulk of the conglomerate's equity portfolio. And he's done so with incredible results since taking over the company in 1965.

Buffett typically holds his equity positions a long time , so it can create quite a stir when he starts selling a stock, especially one of Berkshire's biggest holdings. Buffett did just that when he started selling Apple (NASDAQ: AAPL) shares in the fourth quarter of 2023. But he really made headlines when he sold nearly half of Berkshire's remaining stake last quarter.

Buffett's reason for selling focuses on the favorable tax laws American corporations currently benefit from. He expects taxes to go up in the future. Since Berkshire's sitting on a substantial capital gain from its Apple investment, he decided to take some money off the table and pay taxes now instead of waiting until later.

In the meantime, his fellow billionaires think there's plenty to like about Apple stock. Total shares owned by institutional investors filing form 13F with the SEC declined by just 3 million, despite Buffett's sales of 389 million shares last quarter. Here are some of the biggest buyers and what they might see in the world's most valuable company.

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These billionaires are buying what Buffett's selling

The following billionaires all established or increased positions in Apple, according to their quarterly filings with the SEC.

• Israel Englander bought 5.16 million shares for Millenium Management's $216 billion portfolio, increasing the fund's stake in the stock by 68%.
• Ken Griffin added 2.64 million shares to Citadel Advisor's $494 billion portfolio, increasing its stock position by 93%. He also established positions in several leveraged ETFs focused on Apple.
• Dan Loeb established a new position in Apple for Third Point LLC's $8.7 billion portfolio, buying 1.95 million shares of the stock.
• Steve Cohen established a new position in Apple's stock for Point72's $38 billion portfolio, adding 1.57 million shares. He also significantly reduced the fund's put options, typically a bearish position.
• Brad Gerstner established a new position in Apple for Altimeter Capital, buying 271,370 shares for the $6.7 billion portfolio.

While these five prominent billionaires' purchases don't even come close to equaling the sale Buffett made last quarter, they show that not every investment manager is down on Apple. Even Buffett himself remains optimistic on Apple, a company he called "a better business than any we own" at Berkshire Hathaway's 2023 shareholder meeting. He said he expects Apple to remain Berkshire's largest equity holding for the foreseeable future. The stock remains close to 30% of the conglomerate's portfolio.

There are plenty of good reasons these billionaires were smart to snatch up shares of Apple in the second quarter while Buffett was selling.

Here's why billionaires are still buying Apple

Apple's business centers around its ecosystem of products and services, which serve together to lock customers in to purchase their next device from Apple. The iPhone is the core of the business, and sales have remained relatively stable for the past few years.

Next year could see strong revenue growth, though, driven by new AI features Apple introduced in June. Only newer devices are capable of running Apple's AI services, which could spur a lot of people carrying older iPhones to upgrade this fall. As Apple expands its AI features worldwide, the strong upgrade rate could extend into 2026.

The interest in Apple's new AI features underscores the current growth driver of Apple's business: its services. Apple services generated $93 billion in revenue over the last 12 months, growing 14% year over year last quarter. Services sport an extremely high gross margin (74%), so as they grow to be a larger portion of Apple's total revenue, the company's bottom line is growing even faster.

The growth of AI opens up many opportunities for Apple as a consumer platform. Just as it's been able to capitalize on the App ecosystem and other services on the iPhone and its other products, it could see many more opportunities as AI services grow much larger over the next few years. Apple just laid the groundwork for how it expects AI services to function on the iPhone, and it looks ready to build on top of it.

Apple currently trades at a forward price-to-earnings ratio (P/E) of about 30, after climbing higher in June and July following its AI announcements. Even at today's price, the stock looks attractive considering the company's cash position and strong free cash flow . Apple is using both to buy back shares at a record pace, announcing a record $110 billion share repurchase program in May. That, combined with its growth catalysts for the next few years, should support very strong earnings-per-share growth justifying the premium price.

Billionaires certainly see value in the stock. And considering it's still, by far, Berkshire Hathaway's biggest equity holding, it's safe to say Warren Buffett thinks the stock is still worth holding as well.

Adam Levy has positions in Apple. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy .