Warren Buffett has scored huge wins with Apple (AAPL 0.14%), and the famously successful investor likes the company so much that he's made it Berkshire Hathaway's largest stock holding -- by far. Take a look at the total returns delivered by the tech giant's shares since Berkshire initiated a position in the stock in May 2016.
AAPL Total Return Price data by YCharts
Through the combination of repeated share purchases and massive capital appreciation, Apple has grown to account for roughly 47% of Berkshire's total stock portfolio. Apple still has attractive growth opportunities in mobile hardware, software services, and a variety of other emerging technologies, but I think there's another growth stock in the Berkshire Hathaway portfolio that will go on to deliver even better returns for investors at current prices.
Growth investors should pounce on Snowflake
The ability to access and analyze valuable data is already a crucial competitive differentiator for businesses, and it will only become increasingly important going forward. Snowflake (SNOW 3.19%) provides a data-warehousing service that allows customers to combine and analyze data from Amazon Web Services, Microsoft Azure, Alphabet's Google Cloud, and other service providers. It also operates a data marketplace that lets users monetize their data and purchase data sets from other third-party providers.
Take a look at the infographic below for some of the business's key performance metrics in the fiscal 2022 fourth quarter (ended Jan. 31):
Image source: Snowflake.
Snowflake is providing a service that's helping clients break down walls and gain access to information that leads more valuable analytics insights, and it's posting stellar customer satisfaction and net revenue retention levels. Last year, 100% of the company's customers recommended its services, marking its fifth consecutive year of 100% customer satisfaction. This helped lead to a 178% dollar-based net revenue retention rate in the fourth quarter -- which means existing customers increased their spending by 78% compared to the prior-year period.
Snowflake is providing improved service at less cost to customers this year, but it still expects to grow revenue by roughly 66% annually. Even better, factors including scale, success with enterprise customers, cloud-agreement pricing, and product improvements are leading to margin improvements.
The company's gross margin came in at 74.1% in its 2022 fiscal year, up from 69% in the previous year and 63% in fiscal 2020, and its midpoint guidance for 2023 calls for a gross margin of 74.5%. With new customers joining its services at an impressive clip, increased spending from existing customers, and improving gross margin, Snowflake has a fantastic growth outlook.
Take advantage of the valuation pullback
High inflation, looming interest rate hikes, Russia's invasion of Ukraine, and other factors creating uncertainty have driven steep valuation pullbacks for many growth-dependent tech companies that aren't yet posting substantial profits. While Apple stock is trading down just 4% from its lifetime high, Snowflake's share price is off roughly 44% from its peak valuation.
With a market capitalization of roughly $71.5 billion, Snowflake is already squarely in large-cap territory, but the company still looks downright small when compared to Apple and its roughly $2.86 trillion market cap. If you're looking for growth-oriented stocks in the Berkshire Hathaway portfolio capable of delivering explosive wins, I think taking a buy-and-hold approach to the data specialist's shares would be a great move.
