Almost half of Buffett-led Berkshire Hathaway's portfolio invested in THIS stock; Should you buy it?

At present, Apple accounts for just less than 46% of Berkshire's total holdings. Apple offers some of the world's most sought-after software and technology.

Warren Buffet is undoubtedly among the best investors of all time. Its Buffett leads, Berkshire Hathaway, initially bought Apple (NASDAQ: AAPL) stock in the first quarter of 2016. Since then the leading FAANG stock has soared 599% until February 14 of this year.

Berkshire Hathaway Chairman and CEO Warren Buffett (AP)

At present, Apple accounts for just less than 46% of Berkshire's total holdings, The Motley Fool reported.

Here's what Buffet liked the most about Apple

Apple offers some of the world's most sought-after software and technology. Customers are drawn to the elegant looks and user-friendly functionality. Buffett noticed this a few years back. And this is something that Buffet recognised several years ago. He most likely valued Apple's established ability to set prices as well.

According to The Oracle of Omaha, a company's capacity to increase prices is the best measure of its caliber. Although Apple's hardware is undoubtedly at the high end of the market, there is still a strong demand for it among consumers despite frequent price rises.

It would be difficult for investors to locate businesses in better financial standing than Apple. It produced $70 billion in free cash flow (FCF) and reported an operating margin of 30% in the fiscal year 2015, the year before Buffett initially purchased the stock. Even in the fiscal year 2023, the operating margin remained steady and the firm generated $100 billion in free cash flow and now has $65 billion in net cash.

Back then, there were obvious signs that Apple was an elite company. At the beginning of 2016, its market value was approximately $580 billion. Thus, the company was undoubtedly not operating beneath the radar.

It's shocking, therefore, that Apple's price-to-earnings (P/E) ratio averaged an absurdly low 10.6 in the first quarter of 2016. Buffett was able to take full advantage of a unique buying opportunity that the market was offering, which led to enormous gains.

Should you buy Apple or invest in it?

Undoubtedly, Apple has proven to be an excellent investment. However, if you've been holding onto the stock, is this an excellent moment to purchase it? The one significant distinction between the present and Buffett's initial stock purchase is valuation. The current P/E multiple for Apple shares is 28.7, which 37% higher than the stock's trailing-10-year average ratio.

“I think investors need to be critical of the expensive valuation. It's safe to say that Apple doesn't have the same growth potential that it did when it was a much smaller company. In fact, revenue declined last fiscal year as many of its popular products reach a more mature stage of their lifecycles," said Neil Patel, a long-term investor focused on finding compounding machines.

Apple was not one of the ten stocks that the Motley Fool Stock Advisor analyst team chose as their picks for the top stocks for investors to purchase right now. In the upcoming years, the ten equities that made the cut might yield enormous profits.