Warren Buffett doesn’t understand artificial intelligence (AI), but it could soon make him a lot of money.

Warren Buffett knows a lot about a lot of things. He is an expert in the insurance industry, thanks in part to Berkshire Hathawayowns GEICO and General Re. The legendary investor has studied the banking industry extensively. He knows the ins and outs of energy companies very well (otherwise, he wouldn’t invest so much in Occidental Petroleum).

Buffett would be the first to admit that he doesn’t know everything. There’s one area he doesn’t really understand: artificial intelligence (AI). But AI could soon make this legendary investor a lot of money.

Artificial Intelligence Is Not in Buffett’s Line

Microsoft Co-founder Bill Gates introduced OpenAI’s ChatGPT to Buffett in 2023. Buffett was amazed by what the AI ​​model could do. However, he told CNBC, “I think it’s something I don’t understand at all.”

At Berkshire Hathaway’s annual shareholder meeting, Warren Buffett outlined his views on artificial intelligence. He had compared nuclear weapons to a genie out of a bottle at the previous year’s shareholder meeting. Warren Buffett said, “Artificial intelligence is somewhat similar. It’s part of the coming out of the bottle and it’s extremely important. It’s going to be done by somebody, so we might wish we’d never seen that genie or it might do wonderful things.”

Buffett mentioned that someone showed him a video in which he made a deepfake of himself. He warned that AI “could become the growth industry of all time” for scammers. Buffett added, “As someone who doesn’t understand anything about it, it has a huge potential for good and a huge potential for bad and I just don’t know how it’s going to play out.”

Buffett Could Win a Jackpot Thanks to AI

I think Buffett will soon see how AI plays a big role, though. And he could be in for an AI-powered jackpot.

Berkshire Hathaway’s largest stake by far is Apple (AAPL 0.69%)In June, Apple announced its long-awaited generative artificial intelligence strategy. The company plans to launch its “Apple Intelligence” features in October.

The first version of Apple Intelligence will improve Apple’s Siri assistant. It will generate summaries for emails, text messages, and voicemail. Future versions will include emoji and image generation, ChatGPT integration, and more.

However, Apple Intelligence’s main function will likely be to boost iPhone sales. The new AI feature will only work on the iPhone 15 Pro, iPhone 15 Pro Max, and newer models. Bank of America Analyst Wamsi Mohan believes Apple Intelligence will create strong demand for iPhones. Morgan Stanley believes Apple’s new AI capabilities will be a “clear catalyst for a multi-year product upgrade cycle.”

iPhones account for about 55% of Apple’s total sales. The smartphone also generates additional revenue from accessory products and services. If AI fuels a major upgrade cycle for iPhones, Apple’s revenue and profits will likely increase significantly.

How much could Buffett earn?

Bank of America estimates that a strong iPhone upgrade cycle could send Apple’s stock price up nearly 15% over the next 12 months. Morgan Stanley is even more optimistic, with its analysts expecting Apple’s stock to jump more than 20%.

But let’s be more conservative and assume that Apple’s stock price will only increase by 10% in the short term due to an increase in iPhone sales driven by artificial intelligence. How much money would Buffett make in this scenario?

At the time of writing, Berkshire’s stake in Apple was worth about $176 billion. A 10% increase in Apple’s stock price would translate into a gain of $17.6 billion for Buffett’s conglomerate.

If Apple rolls out even more impressive AI features in the future, it’s not out of the question that we could see a “super cycle” of iPhone upgrades that would continue for years to come. Apple could well be worth a lot more in the future thanks to its AI initiatives.

Buffett doesn’t need to understand artificial intelligence to make a fortune from it. And neither do you or me.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has positions in Apple, Bank of America, Berkshire Hathaway, and Microsoft. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Microsoft. The Motley Fool recommends Occidental Petroleum and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.