Warren Buffett got his start as an investor at just 11 years old. The year was 1942, a world war was raging and the Great Depression was only a few years gone. Despite such challenges, many decades of rip-roaring stock markets were ahead. Buffett notched close to 20% a year returns, firmly establishing himself as one of the world’s richest men.
The world has changed a bit since then. In which case, what might be different in the investing landscape today? What choices could recreate similar portfolio performance? In other words, how might Warren Buffett invest were he young in 2025?
Apple pie
My guess is that Buffett would not change the fundamentals. His early success was built on a tried and tested formula – value investing. He searched for assets that traded for less than their value. Buying stocks at cheap prices, essentially.
Another core principle perhaps arose because the man is, as they say, American as apple pie. This one is his unerring belief in American exceptionalism. “Never bet against America”, he is fond of saying. Or another of his famous quotes on the subject: “The luckiest day in my life is the day I was born, you know, ’cause I was born in the United States.”
I’d wager that a young Buffett would today be looking at where the US might dominate over the coming decades. That, in my view, could very possibly be the field of artificial intelligence.
It’s hard to overstate just how US-centric the AI revolution has been so far. The big names in large language models like ChatGPT, Claude, Grok, and Gemini are all made by American companies. The undisputed heavyweight of designing the chips needed for AI, Nvidia, is based in California.
That’s not to underplay notable contributions from other companies around the world. But if US markets outcompete the rest of the planet for another 80 years? I reckon AI will play a rather large role.
One option
One stock any budding investor looking to emulate Buffett might look at is Palantir (NASDAQ: PLTR). This company is American, of course, based in Denver, Colorado.
Its business is analysing massive data sets with artificial intelligence and machine learning already playing a key role. CEO Alex Karp recently compared the demand for its AI services as like a “ravenous whirlwind”.
One of its current clients is the NHS, where Palantir is aiming to sift through mountains of data to, among other things, shorten waiting lists.
The shares have been flying, up 1.273% in five years, lifting the company to a market cap of $298bn. Were it listed in London, Palantir would be the largest firm on the FTSE 100 – and by some distance!
One major strike against the firm is one that value-orientated Mr B might bristle against – its eye-watering valuation.
The share price of $126 is paired with an earnings per share (EPS) of just 41 cents. The price-to-earnings ratio is over 300!
Massive earnings growth will be needed to justify that – and with current EPS forecasts of 58 cents, 73 cents, and 97 cents for the next three years – this is not expected anytime soon.
As such, this isn’t something I will add to my own portfolio today.
