The Tech Stock Warren Buffett Wishes He'd Bought
Key Points
Warren Buffett never invested in Microsoft, which has been one of the most successful tech stocks.
He elected not to buy shares because of his friendship with Bill Gates, who also served on Berkshire's board of directors.
Buffett wanted to avoid the appearance of impropriety.
- 10 stocks we like better than Microsoft ›
Warren Buffett will step down as CEO of Berkshire Hathaway at the end of the year, and his track record is unimpeachable.
But even a legendary investor like Buffett has missed out on some opportunities. Based on comments he has made, a tech stock he would've liked to have bought is Microsoft (NASDAQ: MSFT) -- and there's a surprising reason why he didn't.
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Why Warren Buffett never invested in Microsoft
Microsoft has been one of the largest companies in the world for decades. At Berkshire's 2018 annual meeting, an audience member asked Buffett why he never bought shares, especially considering Berkshire's investments in Apple.
He answered that in the earlier years, he simply missed out (in his own words, "the answer's stupidity"). Buffett's investment strategy is to only invest in what you understand, and he has been selective with tech businesses.
However, Buffett also explained that "it would just be a mistake for Berkshire to buy Microsoft" because of his friendship with Microsoft co-founder Bill Gates, who also served on Berkshire's board of directors. If Berkshire invested in Microsoft before a better-than-expected earnings report or any other positive news, outside observers might speculate that Gates had shared information with Buffett.
Microsoft would've been a great stock for Berkshire's portfolio, as it's up 798% over the last 10 years (as of Dec. 18). The S&P 500 has appreciated 241% over the same time period. Along with outperforming the market, Microsoft has also delivered six consecutive quarters of revenue growth, in part because of its artificial intelligence (AI) initiatives.
For Buffett, it was more important to avoid the appearance of impropriety than to invest in Microsoft. Even without Microsoft, Berkshire's portfolio includes numerous strong businesses across various market sectors.
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Lyle Daly has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends 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.
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