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Does Warren Buffett Care about Apple’s iPhone Sales Trend?

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Jan. 29 2019, Updated 8:28 a.m. ET

Apple

Apple (AAPL) is scheduled to release its earnings report for the first quarter of 2019 on January 29 after the market closes. In the previous part of this series, we discussed how Apple stock has underperformed the broader market and most of its peers in January. In the quarter ending in December, Apple witnessed a massive drop of 30.1%. The decline was worse than many other tech stocks’ performance in the last quarter.

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Microsoft (MSFT), Qualcomm (QCOM), Alphabet (GOOG), Facebook (FB), Amazon (AMZN), Netflix (NFLX), Oracle (ORCL), and Intel (INTC) lost ~11.2%, 21.0%, 13.4%, 20.3%, 13.4%, 25.0%, 28.5%, 12.4%, 0.8%, respectively, in the quarter ending in December. During the same quarter, NVIDIA (NVDA) and Advanced Micro Devices (AMD) fell 52.5% and 40.2%, respectively, while Tesla (TSLA) stock rose 25.7%.

Buffett’s views on the iPhone

In an interview with CNBC in October, billionaire investor Warren Buffett called the iPhone “enormously underpriced.” Buffett’s luck with tech companies hasn’t been as great as his other investments, which he has acknowledged openly.

In 2017, during Berkshire Hathaway’s annual meeting, Buffett talked about his failure with IBM (IBM). He said, “I thought it would do better in the six years that have elapsed than it has.” While trying to justify his investment in Apple instead of IBM, Buffett said, “Apple—I regard them as being quite a different business.”

In the third quarter, Berkshire Hathaway (BRK.B) bought ~522,902 more Apple shares, which made Apple the investment firm’s largest single holding. Now, Berkshire Hathaway owns ~252.5 million Apple shares. In the last quarter, Berkshire Hathaway’s stake value in Apple rose to $56.99 billion—up 22.2% from $46.64 million in the second quarter. Buffett’s huge bets on Apple could be one of the reasons why he might not ignore the iPhone sales trend this time.

Next, we’ll discuss two more key factors that Buffett and other big investors might watch in Apple’s earnings on January 29.

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