The Zhitong Finance App learned that in the past, it's no secret that Warren Buffett and his subsidiary Berkshire Hathaway (BRK.A.US) avoided investing in technology stocks. Recently, however, Buffett's slogan has changed. He has invested heavily in technology companies such as IBM (IBM.US), Hewlett-Packard (HPQ.US), and TSMC (TSM.US), and the most notable possibility is Apple (AAPL.US)'s heavy inventory.

Bernstein analyst Toni Sacconaghi wants to know why, after so many years, Buffett decided to enter the field of technology? The likely answer, it said, is that all three companies “match” several of Buffett's main investment logic statements: these groups have leading positions and shares, well-known brands, strong returns on capital, and “reasonable” market valuations.

While all of these decisions can be looked back at from foresight and hindsight, one can't help but wonder why Apple is so appealing to Buffett and other companies aren't. Apple is Berkshire Hathaway's largest company to date.

At the end of the day, according to Sacconaghi, it's because Apple is a “leveraged consumer brand.” The Tim Cook led company has moved from its core hardware products to other markets such as streaming music, movies, financial services, and cloud storage, and has established a “high-margin” service business.

Some analysts believe that more than half of Apple's $250 million market value may be related to its service business, including App Store, Apple Music, Apple TV+, Apple Pay, iCloud, etc. By the end of fiscal year 2022, Apple's various service product subscriptions had exceeded 900 million.

Sacconaghi explained that, on the contrary, IBM did not have a similar product business and ended up falling behind in the technology industry's transformation (promotion to cloud computing). Although IBM has entered the huge cloud computing market, it still lags far behind Amazon (AMZN.US)'s network services, Microsoft (MSFT.US)'s Azure, and Google (GOOG.US, GOOGL.US) cloud platforms.

Regarding HP, Sacconaghi said Buffett probably thinks the company is more like Apple than IBM. Sacconaghi added that technological changes, including abandoning printed pages, “may also reflect the profitability of Hewlett-Packard and a situation similar to what IBM has experienced before.” He pointed out that the barrier shift in HP's core business is different from the switch to iOS.

Currently, Sacconaghi said that at the current level, Buffett is unlikely to “substantially” increase his holdings in Apple's stock. Apple currently accounts for about 40% of Berkshire's Hathaway stock portfolio, and the legendary 92-year-old Buffett has always been an “extremely self-disciplined” buyer of the stock, buying when the price-earnings ratio of the stock exchange is below 20 times and selling when the profit is over 25 times.

Earlier this month, Xiaomo said that Apple has five “undervalued” price catalysts that could drive the stock higher over the next 12 months.