Warren Buffett Owns 4 Stocks That Are Members of the $1 Trillion Club. Here's the Best of the Bunch.

Some clubs have lots of members. Others are more exclusive. Few, though, are as hard to get into as the $1 trillion club. To be admitted, a company must have a market cap containing 13 digits.

Only six companies that trade on U.S. stock exchanges are currently members of this super-exclusive group. Warren Buffett's Berkshire Hathaway was briefly in the mix earlier this year but isn't now. However, Buffett has a stake in four members of the $1 trillion club.

Buffett's most visible trillion-dollar stocks

Which trillion-dollar stock is most closely associated with Buffett? It's Apple (NASDAQ: AAPL). The iPhone maker's market cap stands at nearly $3.4 trillion. Apple continues to run neck-and-neck with Nvidia as the world's largest company based on market cap.

Buffett doesn't appear to be as enamored with Apple these days. Berkshire recently revealed that it sold another 100 million shares of the stock in the third quarter of 2024. However, Apple remains the conglomerate's largest holding, making up 23.4% of Berkshire's portfolio.

Amazon (NASDAQ: AMZN) is the other easy-to-spot Buffett stock in the $1 trillion club. Its market cap currently tops $2 trillion. Amazon isn't a large holding for Berkshire, making up only 0.7% of its portfolio. Still, we're not talking about chump change with Berkshire's stake in Amazon: Its 10 million shares owned at the end of the second quarter of 2024 are worth nearly $2 billion.

Buffett didn't personally make the decision to buy Amazon. He told CNBC in a 2019 interview that "one of the fellows in the office that manage money" (a reference to either Todd Combs or Ted Weschler) initiated Berkshire's position in the e-commerce and cloud services giant.

Two others in Buffett's "secret portfolio"

If you only look at Berkshire Hathaway's 13F regulatory filings, you might think Apple and Amazon are the only members of the $1 trillion club in which Buffett has a stake. However, the legendary investor has a "secret portfolio" that includes two other stocks with market caps of more than $1 trillion.

I'm referring to the investment portfolio managed by New England Asset Management (NEAM). This asset management services company was acquired by General Reinsurance Corporation in 1995. Berkshire Hathaway then acquired General Re in 1998. Although Buffett doesn't influence NEAM's investment decisions, he owns any stock in NEAM's portfolio.

NEAM owns 10,540 shares of Microsoft (NASDAQ: MSFT). The technology leader's market cap of over $3 trillion ranks it third behind only Apple and Nvidia.

Buffett has said in the past that he made a mistake by not investing in Google, which is now part of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). However, NEAM corrected his error. The Berkshire subsidiary owns 7,560 class A shares of Alphabet, which sports a market cap of over $2 trillion.

The best of the bunch

Which of Buffett's four stocks that are members of the $1 trillion club is the best of the bunch right now? I like all of them, but one especially stands out.

Apple's new generative AI functionality, branded as Apple Intelligence, might kick off a multi-year iPhone upgrade supercycle. However, I wouldn't call Apple the best just yet. It remains to be seen if the company can return to strong growth.

Microsoft's partnership with OpenAI has made it a key leader in the AI race. I'm unsure, though, if Microsoft can deliver enough growth over the next year to make it a more attractive option than the other three stocks on our list.

Alphabet is a strong contender. Google Search and YouTube continue to dominate their markets. The Google Cloud unit is booming. Self-driving car unit Waymo has a huge opportunity as the robotaxi market expands. My primary reservation about Alphabet is the antitrust lawsuits that hover above the company like a dark cloud.

That leaves my pick as the best of the bunch: Amazon. The company's Amazon Web Services (AWS) business remains the leader in the fast-growing cloud services market. AWS should have tremendous growth prospects over the next decade and beyond. Amazon is the 800-pound gorilla of the e-commerce market but still has plenty of growth opportunities ahead. Like Alphabet, Amazon has another potential avenue for growth in the robotaxi market with its Zoox business.

What I like most about Amazon, though, is its free cash flow. The company generated a mind-boggling $47.7 billion of free cash flow over the 12 months ending Sept. 30, 2024. This reflected a year-over-year increase of 123%. If Amazon can keep delivering free cash flow at this level or greater (and I think it will), this Buffett stock should be able to join Apple, Nvidia, and Microsoft in the $3 trillion club in the not-too-distant future.