Warren Buffett Keeps Selling His Apple Stock: Should You?

The best investment ever for Berkshire Hathaway (NYSE: BRK.B) (NYSE: BRK.A) and Warren Buffett -- from a total dollar amount -- has been Apple (NASDAQ: AAPL). It has been Berkshire Hathaway's largest holding for a decade now, generating huge returns as the technology giant posted a total return of close to 1,000% in the last 10 years.

However, in recent years Buffett has begun to unwind this Apple investment, including another sale of 42 million shares in the third quarter. If this pace of selling continues, Berkshire Hathaway's investment in American Express will soon be the investment conglomerate's largest holding.

Why is Buffett selling Apple? And should you follow suit? For reasons that are clear when looking at its financials, Apple stock looks overvalued compared to other technology giants. Here's why.

Slower revenue growth

Apple's revenue grew just under 7% year over year last year to $416 billion. It remains one of the largest companies in the world, but is failing to grow outside of its iPhone and services segments. Revenue for the iPhone was $210 billion last year compared to $201 billion the year before, with software services revenue of $109 billion vs. $96 billion.

While these segments are showing steady growth, Apple has been much more stagnant versus the big technology competition in recent years. For example, if we look cumulatively over the last three years, Apple's revenue has grown just 7.4% compared to Alphabet's 37% growth and Microsoft's 44% growth. These companies are benefiting from the artificial intelligence (AI) boom with their cloud computing divisions, which Apple never invested in. Apple is the slowest grower among all big technology stocks, which should be a concern for investors and is likely a reason why Buffett decided to trim the position.

Image source: Getty Images.

Where is the product innovation?

Bulls for Apple stock may argue the company has had some solid product successes in the last decade, including the Apple Watch and AirPods as prime examples. However, if we look at these product segments, they generated only $37 billion in revenue last year, or under 10% of Apple's overall revenue.

Even in 2025, the drivers of Apple's business are iPhone sales and software services, which are mostly connected to iPhone users. It has failed to bring a new hardware device to the mass market, with the Apple Vision Pro a massive failure when launched two years ago. Now, it is failing to invest in AI, which could put the profit pool of the iPhone and software services at risk.

Start-ups like OpenAI are building AI-native computing hardware, while Alphabet is embedding advanced AI functions within its own set of hardware such as the Pixel phone. It may not impact market share figures today, but if the competition keeps making more advances in underlying smartphone technology and disruptive computing devices, then Apple is at more and more risk of losing its prime iPhone position every year.

The software side of things is scarier. Traditionally, Apple has received a huge payment from Google Search every year to make it the default search option on the Safari browser, as Google wanted to make sure it was available to lucrative iPhone users. Today, reports are coming in that Apple is going to pay Alphabet $1 billion a year to have Gemini power the Siri chatbot. This lack of innovation should scare shareholders, which could turn a software services cash cow into a cash drain.

AAPL PE Ratio data by YCharts

A demanding valuation

What likely makes Buffett the most nervous about Apple stock today is its valuation. As of this writing on Nov. 15, Apple has a price-to-earnings ratio (P/E) of 37, which is actually higher than Alphabet's at 27, and around the same level as Microsoft's. This doesn't make sense since both Microsoft and Alphabet are growing earnings faster than Apple.

It is no surprise, then, that while Berkshire Hathaway is selling Apple, it actually bought Alphabet for its portfolio last quarter. Smart investors will follow suit given how much innovation is coming out of Alphabet at the moment compared to Apple, and the fact it trades at a much lower P/E ratio.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Berkshire Hathaway, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.