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.

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