Warren Buffett has recently favored Apple (NASDAQ: AAPL). He may be less excited about the stock now. Berkshire Hathaway shed tech major shares in Q4 2023. This deal occurred before the DOJ and 16 state and district attorneys general sued Apple for antitrust violations. Will Buffett sell more Apple stock due to the DOJ antitrust lawsuit? Should you?
Why DOJ sues Apple In the DOJ lawsuit press release, Attorney General Merrick Garland remarked, "Consumers should not have to pay higher prices because companies violate the antitrust laws." said, "We allege that Apple has maintained monopoly power in the smartphone market, not simply by staying ahead of the competition on the merits, but by violating federal antitrust law."
How does DOJ think Apple violates antitrust laws? The department's complaint in the U.S. District Court for the District of New Jersey accused Apple of: Blocked iPhone apps that would help people switch smartphones.
Blocked mobile cloud streaming services that would let users play video games without buying expensive smartphone hardware. Iphone messaging apps that work across platforms were excluded. Limited Apple Watch competitors' functionality. Limited competitor digital wallets by limiting app tap-to-pay.
Apple denies all DOJ charges. It said, "This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets." Apple said, "We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it."
Buffett may sell additional Apple stock. Could Buffett sell more Apple shares due to the DOJ lawsuit? Sure. Will he? I doubt. Buffett supported several of his favorite antitrust-targeted companies. Coca-Cola has being examined by EU and U.S. antitrust officials. No Berkshire Hathaway shares were sold in the food and beverage company.
Furthermore, Buffett told Berkshire Hathaway shareholders at their annual meeting last May that Apple was "a better business" than any other the conglomerate owned. I don't think DOJ allegations would change his mind so quickly.
Buffett may have reconsidered selling Apple shares in Q4. Another of Berkshire's two investment managers may have sold. Buffett's non-controlled Berkshire subsidiary General Reinsurance may have sold 10 million Apple shares.
Sell Apple stock? There may be reasons to sell Apple stock. Growth has stalled for the company. With shares trading at 26x forward earnings, this sluggishness may make its price too high. The DOJ action makes it too soon to sell, in my opinion. Apple will likely fight the antitrust charges. The litigation may distract more than anything.
I also think Apple stock is worth holding. In February, Apple CEO Tim Cook said the company is "investing significantly" in generative AI. He remarked, "Later this year, I look forward to sharing with you the ways we will break new ground in generative AI, another technology we believe can redefine the future."
The company's annual developers conference is June 10–14. Like many others, I expect Apple to announce their AI approach at this conference. The DOJ antitrust lawsuit may go years. Apple may announce huge AI news shortly. I'll keep my tech giant shares. Buffett probably will. Any investor who sells before Apple unveils its AI strategy may regret it.
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