One of the things that makes Warren Buffett a widely admired investor is his willingness to share how he does it. Buffett has been a student of the market since his first stock purchase more than 80 years ago. He shares mistakes made and lessons learned every year in his letter to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shareholders and at the annual shareholder meeting.

Investors also gain insights into his and his team's investments through Securities and Exchange Commission filings disclosing Berkshire's portfolio changes.

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While Buffett has been a net seller of stocks the past few years, he still oversees a portfolio worth $281 billion as of this writing. And nearly half of that is invested in just three exceptional stocks.

Image source: The Motley Fool.

1. Apple (22% of portfolio value)

Buffett first bought shares of Apple (NASDAQ: AAPL) in 2016 when it traded at a valuation too low to ignore. Buffett saw the powerful moat created by the iPhone, locking hundreds of millions of consumers into the Apple ecosystem, and Berkshire Hathaway poured tens of billions of dollars into the stock duringthe next couple of years. At one point, Apple accounted for more than half of Berkshire's marketable equity portfolio. After selling a significant chunk in 2024, it now accounts for 22% of the portfolio.

As mentioned, Apple benefits from a wide competitive moat thanks to the success of its iPhone. Apple's iPhone sales topped $200 billion in each of the past three years, and sales are on track to grow in 2025. The iPhone is the center of Apple's growing ecosystem of devices and services, helping the rest of the business grow.

The services segment is a particularly bright spot for Apple, currently boasting a $100 billion annual run rate. Apple's services are significantly higher margin sources of revenue than its devices. As one of the fastest-growing segments of the business, Apple's overall profit margins are expanding as a result. When combined with Apple's huge share repurchase program, Apple is capable of producing meaningful growth in earnings per share.

Apple faces some headwinds, though. First of all, it's in the crosshairs of the tariffs planned by the Trump administration. Its supply chain relies heavily on China and Taiwan. As a result, its costs could increase and it may have to pass those expenses on to consumers. That could dent its device sales.

Additionally, Apple has been slow to develop competitive artificial intelligence services. It risks losing customers looking for more AI integrated capabilities from their phones and services. Apple customers tend to be locked into the ecosystem, which helps minimize that risk.

Apple stock has fallen from its late-2024 all-time high, trading more than 20% below its peak. At its current price, the stock's valuation is about 28 times forward earnings. While Apple isn't the fast grower it once was, it holds a lot of potential to unlock value with AI services in the future while its iPhone and services businesses remain rock solid today. As such, it looks like a fair price to pay for the tech giant.

2. American Express (16%)

American Express (NYSE: AXP) is a longtime holding for Buffett. He put about $1.3 billion into the stock in the 1990s and hasn't touched it since. Today, those shares are worth nearly $45 billion.

Amex separates itself from other credit card companies by operating as both the card issuer and as the payments network. Most issuing banks partner with Visa or Mastercard to remit payments to vendors from customer accounts. Doing both allows Amex to exercise more control over the business and capture more of the economics of card payments. To that end, it's done extremely well, commanding higher interchange fees from businesses by attracting affluent households to its high-fee products.

Amex has successfully raised the fees on its cards during the past few years. It reported an 18% year-over-year increase in net card fees during the first quarter, while its customers spent just 6% more compared to the first quarter of 2024. That said, the fees collected from processing payments is still its biggest source of revenue.

During the past few years, Amex has shifted strategies to offer more credit products to customers. Its charge cards historically required customers to pay their full balance each month, but Amex now lets customers pay over time with interest. Its interest income grew quickly from 2021 through 2024, but slowed to just 11% growth in the first quarter. That's mostly due to the law of large numbers, as interest income now accounts for nearly a quarter of its revenue.

Amex may be a bit more insulated from an economic slowdown compared to other banks and payment processors due to its focus on high-income households and lesser focus on interest income. As such, it's less susceptible to loan defaults. Amex trades for a significant premium relative to its most comparable competitor, Capital One Financial, but it arguably deserves a premium due to the strength of its customer base, its scale, and its ability to boost revenue through fee increases and more interest-bearing services.

3. Coca-Cola (10%)

Coca-Cola (NYSE: KO) is another stock Buffett bought more than 30 years ago and has no plans to sell anytime soon. His original $1.3 billion investment in the company (yes, the same amount he invested in Amex) is now worth about $29 billion. Not to mention, Coke's paid out more and more each year in dividends. Berkshire shareholders will collect roughly $816 million in dividends from Coca-Cola this year.

The appeal of the company is two-fold.

First of all, it has one of the strongest global brands in history. The red Coca-Cola logo is known the world over transliterated into practically every language known to man. Its brand strength extends well beyond its flagship product, though, to include top-selling carbonated drinks, water, juice, and sports drinks. That gives it considerable pricing power, which it has used to help offset inflation in recent years.

The second factor is its huge scale, which has made it cost-effective to create localized supply chains for producing and packaging its products. That's come to the fore in recent months as global trade policies put pressure on other global companies. Coca-Cola has managed to avoid the impact of tariffs more than its competitors, enabling it to keep its costs down. During its first-quarter earnings call, management warned it's not immune to global trade dynamics, but it's better positioned than most businesses.

Both of those advantages helped Coke produce strong first-quarter results while reaffirming its forecast for the full year. Revenue grew 6% and earnings per share grew 1%. Those numbers might not seem impressive, but they look great compared to Coke's biggest rival PepsiCo, which saw revenue and earnings per share shrink in the first quarter.

Coke's relative strength hasn't gone unnoticed. The stock price has climbed 15% year to date as of this writing, and the shares trade at 24 times forward earnings. That's higher than its historic average, but not outrageously so. With its strong position in the current economic environment, it might be worth paying a premium for Coca-Cola stock. You'll also collect a nice 2.8% dividend yield at the current price.

Should you invest $1,000 in Berkshire Hathaway right now?

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American Express is an advertising partner of Motley Fool Money. Adam Levy has positions in Apple, Mastercard, and Visa. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Mastercard, and Visa. The Motley Fool recommends Capital One Financial. The Motley Fool has a disclosure policy.

Shares of the large lender Capital One (NYSE: COF) were trading nearly 5% higher at noon today. The company reported its first-quarter earnings results after the market closed yesterday, delivering an earnings beat but a slight miss on revenue.

Solid earnings and merger approval

Capital One reported adjusted earnings per share of $4.06, well ahead of analyst estimates. However, revenue of $10 billion came up slightly short of estimates. Meanwhile, credit metrics held up well, with expected loan losses and 30-plus-day delinquencies falling from the previous quarter.

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Furthermore, Capital One recently received regulatory approval for its pending acquisition of Discover Financial Services. The acquisition will add a highly coveted payments arm to Capital One's repertoire while also bringing over a large consumer lending portfolio that will pair nicely with Capital One's current business.

On the earnings call, Capital One's CEO Richard Fairbank said the company expects to achieve the $2.7 billion of network and cost synergies it laid out when initially announcing the acquisition, which is now expected to close on May 18.

Gaining a significant moat

Overall, Capital One's earnings came in solid. While the company is certainly vulnerable to an economic downturn, management is experienced and knows how to navigate choppy waters.

Closing the Discover deal and adding a global payments network is a significant achievement for Capital One. It also makes the company that much more of a compelling buy because there aren't that many companies that can run a payments business at global scale, and this performance won't be easy for competitors to replicate.

Should you invest $1,000 in Capital One Financial right now?

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Discover Financial Services is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

Shares of Apple (NASDAQ: AAPL) are currently 26% below their peak from December last year (as of April 10), a drop that has been spurred by ongoing tariff announcements. As of this writing, there is a huge 145% tariff that's implemented on goods leaving China for the U.S. If this remains in place, it could harm Apple, because 80% of its production is still based in China, according to estimates from Evercore.

For consumers, the result could be much higher prices. If the increased costs are eaten by Apple, on the other hand, its profitability will definitely take a hit. There remains a lot of uncertainty about how things will play out.

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Despite the potential effects, which are commanding all the attention these days, Apple has proven to be successful in another area that highlights growing diversification in the business model. Here's what investors need to know.

Apple's push into financial services

In fiscal 2024 (ended Sept. 28, 2024), Apple generated $391 billion in revenue, of which 75% came from the sale of products. This includes its popular iPhone, Mac, and iPad lineups.

But the company's services division is an up-and-coming money-maker, growing revenue 13% in the latest fiscal year, much faster than the overall business. It represents the other 25% of Apple's total sales.

Within services, Apple is making a bigger push into the financial services realm, where it appears to have developed a strong foothold.

In 2014, the company launched Apple Pay, its digital wallet solution that lets users connect credit and debit cards to use for transactions in-store and online. More than 90% of retailers in the U.S. accept Apple Pay, which has more than 600 million global users and handles trillions of dollars in payment volume. This is undoubtedly becoming a widely used checkout option.

Apple Card was launched in 2019. This is a credit card that gives consumers up to 3% cash back with no fees whatsoever. Apple partnered with Goldman Sachs to handle the program. The credit card portfolio has 12 million customers (data from early 2024) and $20 billion in balances.

Valuable for partners

It was reported that Visa offered the tech titan a cool $100 million to end its relationship with Mastercard, the current card network for Apple Card. American Express is also in the mix. What's more, issuers like JPMorgan Chase, Capital One, Synchrony Financial, and others are reaching out to Goldman Sachs, offering to take over the $20 billion in balances and to handle the program.

It makes sense why these heavyweights in the financial services industry would be trying so hard to be Apple's partner. Apple generates enormous amounts of revenue, and its customers are generally known to be more affluent than average. Consequently, there is a lot of buying power here, which can lead to revenue opportunities for banks and payment networks.

Apple might be facing some headaches due to tariffs and how they can affect its device sales. But its payment and credit card offerings continue to shine brightly. Partners are jockeying for position.

Should you buy Apple stock on the dip?

This gets to the discussion of whether or not Apple shares are a smart buy right now, especially since they are 26% below their record high. The price-to-earnings ratio is better than it was in December -- it's now at a 30.2 multiple.

However, I'm not convinced the tech stock can produce a return over the next five years that can outperform the broader market. Not only is the valuation still elevated, Apple's growth prospects aren't that robust. Plus, there is the unfortunate overhang of the tariff situation.

This is a fantastic business. But investors should pass on buying shares.

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

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American Express is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Synchrony Financial is an advertising partner of Motley Fool Money. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Goldman Sachs Group, JPMorgan Chase, Mastercard, and Visa. The Motley Fool has a disclosure policy.

The financial market made a quick recovery this week with some of the more volatile names in the industry leading the way. Wenesday's news that tariffs (outside of China) would be delayed by 90 days led to some optimism and even weak economic data late in the week didn't put a damper on the market.

According to data provided by S&P Global Market Intelligence, shares of SoFi Technologies (NASDAQ: SOFI) jumped as much as 11.3% this week, KKR (NYSE: KKR) was up 9.2% at its peak, and Capital One Financial (NYSE: COF) rose 7.4%. The stocks are up 10.6%, 7.5%, and 6%, respectively, as of 2:30 p.m. ET.

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Bouncing off a low

To be fair, the moves this week are compared to last week's market collapse. Shares are still down from the beginning of April, only 11 days ago, and have all fallen so far in 2025.

SOFI data by YCharts

With that perspective, it's hard to call this a durable rally. But investors were betting this week that a delay in some tariffs and potential deals on others would reduce the risk of a recession and therefore defaults on the debt companies like SoFi and Capital One have on their balance sheets. KKR's rise was clearly because asset values are up, and that's a big part of their fee structure.

While the short-term risk may be seen as lower than a few days ago, there are still more risks today than early this year as economists ramp up their expectations for a recession. And making matters worse is the rise in interest rates this week that could make it more costly for companies, consumers, and even the government to refinance debt. Oh, and the dollar is dropping, too.

Taking a step back

Long-term investors will want to take this opportunity to look at the long-term trends in the market and economy. So far in 2025 consumer confidence is down, tariffs and expectations for inflation are up, and interest rates are rising.

Those factors don't bode well for the economy or financial firms, so it'll be a matter of who will survive and thrive through upcoming market turbulence. I don't think we're in for major losses on loans at this point, but the risks for financial companies are leveraged compared to most stocks based on their business models, so earnings and guidance will be worth watching closely.

Ignore the volatility

As these stocks rise and fall rapidly, it's important for investors to keep in mind the long-term goal, which is to buy opportunistically when the market is thinking short-term. I think these companies will be able to manage risks better than what the market saw during the financial crisis and while the recovery may not be smooth I'm starting to dollar-cost average at lower prices. Long-term, any big dips are opportunities for investors.

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The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SoFi Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $496,779!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $659,306!*

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Travis Hoium has positions in SoFi Technologies. The Motley Fool has positions in and recommends KKR. The Motley Fool has a disclosure policy.