Warren Buffett's $35 Billion Bet on Tim Cook's Apple Grew to $185 Billion Pretax. Here's What That Stake Says About Long-Term Investing.

Of all the great investments that former Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) CEO Warren Buffett made over the years, Apple (NASDAQ: AAPL) might have been his best.

Up until his first investment in Apple in 2016, or perhaps with a position he opened in International Business Machines (NYSE: IBM) in 2011, Buffett had been reluctant to invest in technology stocks because he said he didn't fully understand them.

But he soon understood Apple enough to make it his largest holding and best investment. Over the years, Berkshire has made more than $100 billion on Apple stock, Buffett told CNBC back in July of this year.

Former Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

Best business in the world

Back in 2020 on CNBC, Buffett called Apple "probably the best business I know in the world," adding that he doesn't think of Apple as a stock. "I think of it as our third business." That would be a third business along with insurance and railroads.

That first investment in Apple stock was 9.8 million shares in the first quarter of 2016, when the stock traded at about $25 per share. It was just the beginning of Berkshire Hathaway's commitment to Apple, which Buffett himself discussed at the 2026 Berkshire Hathaway shareholder meeting back in May.

"About 10 years ago, we made a commitment to essentially move 10% of the total resources of Berkshire Hathaway. We turned it over to another person who was not that well known at the time, and we did that by spending roughly $35 billion buying stock in Apple Corp," Buffett said. "I would like to report that 10 years later, several things have happened. One is that the $35 billion -- counting dividends, realized appreciation, and unrealized appreciation -- has turned into $185 billion pretax."

Apple became Berkshire's largest holding by the end of 2017, representing about 15% of the total portfolio. Six years later, by the end of 2023, Berkshire had amassed a $174 billion investment in Apple, which made up a staggering 50% of its $347 billion portfolio.

After that, Buffett began paring back Berkshire Hathaway's Apple position. Part of it was surely profit-taking, but he also said in a recent interview that he was wary about having one stock take up 50% of the portfolio. Apple is still Berkshire's largest position, but it's "only" a $66 billion investment, making up 22% of the total portfolio.

The perfect Buffett investment

There are key takeaways from Berkshire's long-term commitment to Apple that illuminate some of Buffett's investing tenets. One is to buy great businesses at fair prices. In early 2016, Apple stock had slumped and was trading at a deep discount, at just 10 times earnings, its lowest valuation in 10 years.

It also represents Buffett's belief in investing in companies with strong leadership and management -- in this case, former Apple CEO Tim Cook. "When we made our investment and turned over 10% of Berkshire's resources, we were turning it over to Tim. As I say, he has turned that into $185 billion pretax," Buffett said at the shareholder meeting. "I think it's appropriate if Tim Cook would take a bow and our shareholders would say thanks to him."

Further, Apple had, and has, the kind of industry leadership and competitive moat that sets it up for long-term success. And of course, the 10-plus year investment in Apple shows the value of holding on to a great investment for the long term, even though Buffett himself recently admitted that he might have sold too soon on Apple.

But overall, Berkshire's investment in Apple isn't just a great example of the benefits of long-term investing. It also represents, perhaps, the perfect Buffett investment -- the culmination of everything he looks for in a stock.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and International Business Machines. The Motley Fool has a disclosure policy.