Buffett Watch

Buffett says IBM's Watson will have greatest value when it replaces human labor

Key Points
  • Warren Buffett says IBM's artificial intelligence unit Watson has great potential and such technology should one day replace humans.
  • The billionaire investor told CNBC last week he sold about a third of his stake in IBM in the first two quarters of this year.
  • Buffett said Watson has so far not performed as well commercially as hoped.
Buffett: There are a lot of possibilities with IBM's Watson

Billionaire investor Warren Buffett said Monday that IBM's artificial intelligence unit Watson should one day take the place of humans.

"I would think the biggest value will come in when it actually replaces human labor, and machines don't come round annually and ask for higher wages, and they don't need health care, and maybe a little maintenance," Buffett said on CNBC's "Squawk Box."

"It should replace people in a big way, unless some other products do the same thing," he said, noting Watson's potential for reading X-rays faster and better than humans.

Buffett told CNBC last week he owned about 81 million shares of IBM at the end of 2016 and sold off about a third of that stake in the first and second quarters of 2017.

"Watson is a pretty amazing invention," Buffett said. "I'm sure the revenue is growing very significantly but from a very small base."

"I think it has great potential. It has not come along as fast commercially as you would have hoped," he said.

On Saturday, Buffett spoke for hours in front of some 40,000 attendees at the CenturyLink Center in Omaha, Nebraska, the site of Berkshire Hathaway's annual meeting.

Read stories from CNBC's interview with Warren Buffett
Buffett defends buyout firm's 'standard capitalist formula' of layoffs
Buffett says Trump hasn't had much effect on the economy yet
Warren Buffett: I used Berkshire's insights into the furniture business to figure out Apple's worth
Warren Buffett says the fake account scandal at Wells Fargo hurt its reputation
Republican health-care bill will 'cut the hell out of taxes' for the rich, says Warren Buffett
Warren Buffett says he never wants to be out of the stock market
Buffett says United made a mistake in its initial response to dragged passenger
Charlie Munger: 'The amount of waste from overtreatment of the dying is just disgusting'

More In Buffett Watch

CNBC ProBuffett disciple Mohnish Pabrai shares 3 ways to identify long-term winners
CNBC ProBuffett disciple has just one U.S. stock in his portfolio — and it's a chip stock