Apple shares had a volatile week after Warren Buffett’s Berkshire Hathaway announced that it would sell about half of its stake in the technology giant, increasing its cash holdings to nearly $277 billion, according to figures released last Saturday.

Shares lost about 2% for the week and are still up 12% year-to-date. The recent sell-off puts the stock in line with year-to-year gains in the Nasdaq Composite and the S&P 500.

Berkshire’s quarterly report suggests that 93-year-old Buffett, one of the world’s most respected investors, is increasingly concerned that stock market valuations have become too high or that the U.S. economy as a whole may be in a precarious position.

Stock markets experienced a volatile trading week as investors debated whether the economy is heading for a recession and whether the Federal Reserve may have waited too long to cut interest rates in its effort to “softly land” the inflation cycle.

“When you look at Berkshire’s big picture and the macroeconomic data, it’s safe to conclude that Berkshire is becoming defensive,” says Cathy Seifert, an analyst at CFRA Research who recommends Berkshire as a “buy.”

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Warren Buffett’s Berkshire Hathaway increased its cash holdings to $277 billion last quarter – a new record. (Kevin Dietsch/Getty Images)

Dan Ives, managing director of equity research at Wedbush Securities, warned: Apple remains Berkshire’s largest holding by far and that the reduction of the company’s stake in the technology giant is not necessarily a harbinger of bad economic news.

“We note that Berkshire still has Apple as its No. 1 holding today, and at around $41 billion, it’s more than double its next-largest holding, Bank of America,” he wrote. “While bears will clearly seize on this news and the story following Friday’s brutal sell-off in tech stocks, we strongly caution that Buffett is a firm believer in Apple and we don’t view this as a smoke signal for bad news.”

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Apple remains Berkshire’s largest holding, valued at around $84 billion. (Michael Nagle/Bloomberg via / Getty Images)

Berkshire’s Cash balance The value rose to $276.9 billion as of June 30 from $189 billion three months earlier, largely because Berkshire sold $75.5 billion worth of stock. The company sold about 390 million Apple shares in the second quarter, in addition to the 115 million sold from January to March, when the iPhone maker’s stock price rose 23 percent. Berkshire still owned about 400 million shares worth $84.2 billion as of June 30.

At Berkshire’s annual meeting in May, Buffett said that despite reducing the company’s stake in Apple, he still expects it to be the company’s largest holding at the end of this year.

“We have been selling stocks and I would say that at the end of the year it is highly likely that Apple will be our largest common stock,” Buffett said.

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Warren Buffett said at the company’s annual meeting in May that he expects Apple to remain Berkshire’s largest holding even if the company reduces its stake in the technology giant. (Christopher Goodney/Bloomberg via / Getty Images)

Buffett explained that he currently considers building up the company’s cash position to be a better alternative than buying more shares. He also discussed the tax consequences of selling Apple shares at a time when Capital gains tax rates are lower than in the past and large federal budget deficits could lead to a future increase in these rates.

“Under current conditions, I don’t mind building a cash position at all. When I look at the alternatives that are available in the equity markets and when I look at the composition of what’s going on in the world, I find that quite attractive,” Buffett said.

“Almost everyone I know is much more careful about not paying taxes than I think they should. We at Berkshire don’t mind paying taxes, and we pay a 21% federal tax rate on the profits we make at Apple. That rate was 35% not long ago, and 52% in the past when I was there,” he added.

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“I don’t mind writing this check in the least, and I really hope that after all that America has done for all of you, it shouldn’t bother you that we’re doing it. And if I do it at 21% and we do it later at a much higher percentage, I don’t think you’ll really mind that we sold a little bit of Apple this year,” Buffett said.

Reuters contributed to this report.

This story has been updated to reflect Apple shares through Friday.