Buffett and Munger Talk AI, Robotics, and More at Berkshire … – The Motley Fool

Given Warren Buffett's love of good old-fashioned businesses that have proven themselves over decades, it wouldn't be surprising ifBerkshire Hathaway's (BRK.A -0.60%) (BRK.B -0.71%) chairman and CEO were wary of the euphoria over artificial intelligence (AI).

But while Buffett and his longtime vice chairman, Charlie Munger,both expressed caution about these trends at the Berkshire Hathaway annual shareholders meeting on Saturday, they also had some favorable things to say. Here's what Buffett and Munger said about AI and robotics, as well as the role that AI and robotics could play in Berkshire's portfolio going forward.

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Munger has been a longtime proponent of U.S. cooperation and investment in China. Munger's investment in Chinese tech giant Alibabaand his support of Chinese electric vehicle (EV) maker BYD illustrate the growth opportunities and value that Munger believes China offers investors. "Well, if you went into BYD's factories in China you would see robotics going in at an unbelievable rate," Munger said. "So, we're going to see a lot more robotics in the world. I am personally skeptical of some of the hype that has gone into artificial intelligence. I think old-fashioned intelligence works pretty well."

Put another way, Munger sees the impact that robotics is having on manufacturing but is wary of the risks investors are taking in AI stocks. This is a stark contrast to Munger's past comments on cryptocurrency, where he called it "rat poison" and saw it as both a bad investment and useless relative to the U.S. dollar.

While Buffett shares the same hesitance about getting lost in the AI hype, there was no denying his respect for AI and its possible effects on the economy.

"There won't be anything in AI that replaces the gene. ... I'll state that unqualifiedly. It can do amazing things," said Buffett during the meeting. "Bill Gates brought me out the latest ... maybe not the latest version, but one he thought maybe I could handle. ... And it did these remarkable things, but it couldn't tell jokes."

Buffett is a big believer in human ingenuity. He often quotes American heroes like Abraham Lincoln and marvels at their decision-making ability. Although AI has a great deal of utility, it can't replace human creativity.

While Munger was more interested in the business benefits of robotics and AI, Buffett seemed to indicate that it could be yet another technology that could do remarkable things but will permanently change the human condition.

When something can do all kinds of things, I get a little bit worried because I know we won't be able to uninvent it. And we did invent for very, very good reason the atom bomb in World War II. And it was enormously important that we did so. But is it good for the next 200 years of the world, that the ability to do so has been unleashed? We didn't have a choice. But when you start something... well, Einstein said after the atom bomb, he says, 'This has changed everything in the world except how men think.' And I would say the same thing may ... not the same thing. I don't mean that. But with AI, it can change everything in the world except how men think and behave. And that's a big step to take.

There is no denying that Pandora's box has been opened for AI. A UBS study noted that OpenAI's ChatGPT reached over 100 million monthly active users (MAU) in January 2023 after launching on Nov. 30, 2022, making it the fastest application to cross the 100 million MAU mark. It then passed 1 billion monthly page visits to its website in February.

AI is having a snowball effect on search engines and consumer products. Rapid AI adoption will lead to technological improvements, and meaningful benefits, but will also make the technology more powerful than ever before.

Throughout the history of Berkshire Hathaway, Buffett has made a habit of never pretending to understand something. And for that reason, Berkshire is built around traditional businesses like railroads, utilities, and insurance companies. Until recently, the vast majority of Berkshire's public equity holdings were also these kinds of businesses. That is, until Buffett started giving more control to other members of his leadership team, who convinced him to invest in Apple (AAPL 0.81%).

As of March 31, Berkshire's Apple stake was worth a staggering $151 billion, making it roughly 46% of Berkshire's public equity portfolio. During the annual meeting, Buffett praised Apple for its relentless stock buybacks and called its products extraordinary. "Our criteria for Apple isn't any different than the other businesses we own -- it just happens to be a better business than any we own," Buffett said. Buffett said that although Berkshire has more money invested in BNSF Railway (which it owns fully) than Apple -- and that the railroad is a good business -- BNSF doesn't even come close to how good a business Apple is.

Buffett and his team are often known for being dyed-in-the-wool value investors who are hesitant to change. However, if there is a business that makes sense, Berkshire has shown it will deploy a sizable amount of capital toward a good idea.

When the iPhone changed the smartphone market in 2007, few investors, let alone Buffett himself, could have likely imagined that Apple would become Berkshire's largest public equity holding within a generation. Will the same be said for AI and robotics?

If there's one thing Buffett and his team love, it's a good business. If a company makes sense, is well-run, and has the fundamental traits Berkshire Hathaway looks for, then it could become a Buffett holding.

But don't expect Buffett to go chasing AI stocks to make a quick buck. Berkshire Hathaway could have bought Apple earlier on and made a far greater return. Instead, Berkshire waited for Apple to prove its dominance before it began loading up on the stock. The return has still been incredibly impressive.

For that reason, it would be surprising if Berkshire jumped into an AI or robotics stock in the next few years. But 5 to 10 years down the line, it would be equally unsurprising if one of the top five Berkshire Hathaway public equity holdings is an AI or robotics stock.

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Buffett and Munger Talk AI, Robotics, and More at Berkshire ... - The Motley Fool