Track market-moving stories before they get noisy

A couple of years ago, when artificial intelligence (AI) chatbots were in their early stages of development, Berkshire Hathaway (BRKA -0.20%)(BRKB -0.04%) wasn't jumping aboard the craze. Warren Buffett, the CEO at the time, takes a very methodical and practical approach to investing, centered on businesses and industries he knows very well. Investing in AI stocks, particularly in their early innings, is not something many investors would have expected from the Oracle of Omaha.

What was surprising, however, was when Buffett revealed he initiated Berkshire's position in tech company Alphabet last year. While Alphabet isn't just an AI stock but a behemoth in the tech sector, it was symbolic of perhaps greater interest in emerging technologies. Under new CEO Greg Abel, the company may become even more aggressive in pursuing top AI stocks. Here's why.

Image source: Getty Images.

Berkshire is recognizing the positive impact AI is having on many businessesBerkshire invests in and owns many different types of businesses. Having exposure to different sectors of the economy enable it to get a broad overview of how AI is affecting many types of businesses. And the insights it has gained amid that gave the company the confidence to invest in a big tech giant. "We have a lot of visibility from within our companies as to how we're using AI, what type of benefits it's delivering, so that brought incremental interest, and then we saw Google as a significant player," Abel stated in a recent interview with CNBC.

Alphabet owns Google, and the business has benefited from AI's growth in multiple ways, not only revamping its search engine but also developing its own chatbot, Gemini, along the way. Alphabet is an early leader in the space. Abel, however, may end up considering other tech companies as well, which are in excellent positions to take advantage of AI-related opportunities. Some obvious examples here include Microsoft and Nvidia.

At the very least, investors shouldn't be surprised if there are more AI stocks that find their way into Berkshire's portfolio in the near future.

Today's Change

(

-0.04

%) $

-0.20

Current Price

$

505.83

Why investing more heavily in AI could help Berkshire's stockIn the past 12 months, Berkshire's stock has generated flat returns. It also trades at 13 times earnings, which is the multiple investors might expect for a slow-growing business. If, however, Abel does take a more aggressive approach toward AI, that could lead to greater excitement around the business, potentially attracting a younger group of investors, and it may also result in the stock trading at a higher premium.

AI is an intriguing area for Berkshire to focus on, with ample opportunities for the business and many high-quality tech stocks it could add to its portfolio in the near future. Now may be a great time to buy shares of Berkshire Hathaway.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

VistaShares Target 15 Berkshire Select Income ETF has outperformed Berkshire Hathaway since its March 2025 IPO, delivering its 15% annual yield target. OMAH's portfolio is 10% Berkshire Hathaway and 90% “equal”-weighted top US Berkshire holdings, minimizing exposure to cash and capital-intensive businesses. The fund's options strategy—short-dated, out-of-the-money call and put spreads—generates high income while limiting downside and minimizing forced roll risk.

Berkshire Hathaway (BRKA -0.48%)(BRKB -0.41%) is a Wall Street icon because of Warren Buffett's long and successful history of buying stocks. His success earned him the nickname "the Oracle of Omaha," and Berkshire Hathaway was basically a way to invest alongside the famous investor. The company's story changed in 2026, when Greg Abel took over as CEO, and Buffett initiating Berkshire Hathaway's recent purchase of Alphabet (GOOG -1.05%) shares hints at a new model for the company.

Buffett isn't gone, he's just in a new job Warren Buffett stepped down as CEO of Berkshire Hathaway at the end of 2025, handing the reins to hand-picked successor Greg Abel. But Buffett didn't really retire; he shifted to the position of president of the board. So he is still Abel's boss and available to help out as needed. Given that Buffett initiated the company's large recent purchase of Alphabet stock, it looks like he's still calling the shots when it comes to investing.

Image source: The Motley Fool.

But the Oracle of Omaha isn't making all of the decisions, noting that Greg Abel was the one who made the call on Berkshire's acquisition of Taylor Morrison Home. The difference is that Taylor Morrison Home was a strategic move that Abel hopes will allow Berkshire Hathaway to integrate its homebuilding-related businesses into one operation. That's more of an operational decision, while the purchase of Alphabet shares was an investment decision.

At its core, Berkshire Hathaway is an insurance company What's notable about these two decisions is that Abel is focused on running the business, while someone else is focused on investing. Someone else happens to be Wall Street icon Warren Buffett, but it could actually be anyone. Or, eventually, an entire team of people. That is how most insurance companies operate. Management focuses on running the business, and a specialized investment team runs the investment portfolio. At its core, Berkshire Hathaway is an insurance company.

Today's Change

(

-0.41

%) $

-2.10

Current Price

$

506.03

In fact, that was Buffett's real genius. He realized he could use the float (the premiums the company holds onto while waiting to pay out claims) to invest more aggressively in stocks than most insurers do. Along the way, he created a massive conglomerate. Abel seems to be focusing on running the conglomerate while letting someone else handle the investing side.

Since Buffett was a hands-off manager as CEO, focusing most of his effort on investing, there could be a significant opportunity for Abel to improve the company's operating businesses. In other words, the split taking shape between what Abel and Buffett are doing could be an important indication of Berkshire Hathaway's future direction. And it would leave the company operating more like a traditional insurance company, which probably wouldn't be a bad outcome.

Berkshire Hathaway (BRKA -0.48%)(BRKB -0.41%) is off to a strong start in its first year under CEO Greg Abel. Second-quarter operating earnings rose 16% from a year earlier. The stock, near $505 as of this writing, puts the company's market value at about $1.1 trillion.

Whether the next five years look as good is a harder call. Over a stretch that long, the stock should mostly track two numbers -- how fast operating earnings grow, and what multiple of those earnings investors will pay.

And both numbers hinge, arguably more than anything else, on what Abel does with the company's $365 billion of cash and U.S. Treasury bills.

Image source: Getty Images.

Strong growth, and a price to matchOperating earnings are Berkshire's preferred yardstick. The measure leaves out the stock portfolio's gains and losses, which swing reported net income from quarter to quarter and which the company says are usually meaningless in any given period.

On that measure, the company earned about $13 billion during the second quarter. First-half operating earnings totaled $24.3 billion, 17% more than a year earlier.

The growth is a rebound, not a continuation. Operating earnings slipped 6% in 2025, to $44.5 billion, dragged down by weaker insurance results.

This year, growth is broad-based outside insurance. BNSF, the energy business, and the manufacturing, service and retailing group all grew first-half earnings between about 10% and 15% year over year.

Add up the past four reported quarters, and Berkshire has earned about $48 billion of operating earnings, or about $22 for every Class B share. Against a $505 share price, that comes to about 23 times operating earnings -- a premium price, in my view. Investors are paying today for growth that hasn't happened yet.

Greg Abel has started spending the cashBerkshire's cash and U.S. Treasury bills stood at about $365 billion at midyear, a little less than at the start of the year.

In January, the company closed its $9.4 billion purchase of the chemicals maker OxyChem. In late July, it paid about $6.8 billion in cash for homebuilder Taylor Morrison. And it repurchased about $4.5 billion of its own stock in the second quarter, after buying back almost none in the first. The buyback decision is Abel's now, made in consultation with chairman Warren Buffett.

Berkshire was a net buyer of stocks, too. The cost basis of Berkshire's equity portfolio rose about $21 billion during the first half.

Those uses of cash do different jobs for the five-year math. An acquisition adds operating earnings directly. Stock purchases mostly add just dividend income, since portfolio gains sit outside the operating measure. And buybacks shrink the share count, down about 0.5% through June, so each share gets a bigger piece of the earnings.

Meanwhile, the case for leaving the cash parked may get weaker. After all, Berkshire's insurance investment income fell about 8% in the first half, a decline the company attributed to lower short-term interest rates. The less Treasury bills pay, the more the five-year outcome depends on Abel finding better places for the money.

Where could the stock land?Assume growth settles at 5% a year, slower than 2026 but better than 2025, and that investors put a lower valuation multiple on a slower Berkshire -- say, 18 times operating earnings. Per-share operating earnings would reach about $29 by mid-2031, and the stock would sit near $525. Five years of almost nothing.

The upside case leans on the cash. If acquisitions and buybacks help operating earnings compound at 10% a year (a pace the company has beaten so far in 2026), and the stock keeps a valuation near 22 times operating earnings, per-share earnings reach about $37. The stock lands a little above $800, about a 10% annual return.

Today's Change

(

-0.41

%) $

-2.10

Current Price

$

506.03

The stock portfolio adds noise to every path. Berkshire's five largest holdings made up 66% of its $324 billion equity portfolio at midyear: Alphabet, American Express, Apple, Bank of America, and Coca-Cola. Of course, a rough stretch for even one or two of those positions could move what investors pay for the whole company. But the portfolio is only about 30% of Berkshire's market value, and its swings don't touch operating earnings at all.

Ultimately, I'd split the difference. Growth near 8% and a valuation of 20 times operating earnings would put the shares around $650 in five years, a mid-single-digit annual return, plus whatever Abel's dealmaking adds on top.

But here's what's interesting about this investment. The downside risk seems low given Berkshire's cash, and there are scenarios that could be far more bullish than we've outlined here if the company deploys its cash into the right assets at the right time. For that reason, I believe Berkshire is a great core holding, even if expectations for the stock are modest. I believe the stock offers meaningful upside potential with low downside risk.

The most notable change in Berkshire Hathaway's (BRKA -0.48%)(BRKB -0.41%) massive, roughly $360 billion stock portfolio this year has been the conglomerate's large increase in Alphabet (GOOGL -1.11%)(GOOG -1.05%).

While Berkshire initiated the position last year under Warren Buffett's leadership, the company has significantly increased its stake in Alphabet under new CEO Greg Abel. Between the end of 2025 and the end of the second quarter of this year, the value of Berkshire's Alphabet position soared from about $5.6 billion to nearly $37.8 billion, making Alphabet one of Berkshire's largest positions.

Perhaps even more interesting is that as Berkshire was buying, Alphabet's returns have declined. Will Alphabet break Warren Buffett's cardinal rule of investing?

Image source: The Motley Fool.

Returns are declining as capex soars In a surprising interview with CNBC in July, the 96-year-old Buffett, who remains executive chairman of Berkshire, revealed he had initiated the Alphabet position last year, meaning he and Abel likely decided together to significantly increase Berkshire's stake.

During this same interview, Buffett also told CNBC, "The trick in life is to find -- I mean investing -- is to find businesses that are going to earn high returns on capital for an extended period of time," Buffett said.

By returns on capital, Buffett is most likely referring to return on invested capital (ROIC), which essentially examines how efficiently companies use capital to generate profits. Capital, in this scenario, refers to both debt and equity.

The goal is for companies to generate ROICs that are above their weighted average cost of capital (WACC). Right now, Alphabet is experiencing declining ROICs, and that trend is expected to continue in future years, according to Wall Street analysts.

According to Visible Alpha, Alphabet generated a post-tax ROIC of over 58% in 2024, which is simply remarkable. In 2025, that number declined to roughly 42%. This year, analysts on average expect another decline to 38.3%.

Premium Feature

Moneyball Superscore

93/100

Today's Change

(

-1.11

%) $

-3.80

Current Price

$

338.46

While much more difficult to predict and likely to be revised, analysts also expect Alphabet's ROIC to decline in each year between 2027 and 2029, falling below 31% by 2029, which, generally speaking, is still quite strong.

The reason for the decline is that Alphabet, along with other hyperscalers, is significantly increasing its capital expenditures to build artificial intelligence infrastructure. Alphabet has guided for roughly $200 billion in capex this year, and that number is expected to "increase significantly in 2027," according to Alphabet CFO Anat Ashkenazi on the company's most recent earnings call.

Increased capex leads to lower ROIC, which is net operating profit after tax divided by invested capital. Capex increases the denominator, invested capital.

Buffett clearly knows this, so what is his plan? Buffett is widely considered the greatest investor of all time, so he clearly understands what is happening.

While he probably doesn't love the near-term trends, he likely also realizes that Alphabet, as a hyperscaler, feels the significant capex investment is necessary to avoid missing out on the AI revolution. Investors should also understand that these companies are led by some of the brightest minds in the world. While they aren't always right, they don't make bets like this unless they have a strong conviction. The goal is for capex to flatten in the coming years and for revenue to accelerate over many years thereafter, leading to higher ROICs.

Today's Change

(

-0.41

%) $

-2.10

Current Price

$

506.03

Now, whether this happens or not is hotly debated on Wall Street, and investors have seen this debate on full display this year in the stock prices of hyperscalers, which have bounced around. While Alphabet's ROIC has fallen significantly, a consistent ROIC above 30% remains quite attractive, though it also depends on how much the company's WACC increases, if at all.

So, while I wouldn't say Alphabet is breaking Buffett's cardinal rule for investing just yet, it raises the possibility. Buffett, Abel, and the Berkshire team likely believe this is only a small bump on the road. Remember, Berkshire likes to buy stocks it can ultimately hold forever.

There are other Alphabet-owned businesses that also make the stock a compelling buy. But it will be interesting to see if and when Alphabet can return its ROIC to levels seen in recent years, and how much slack Buffett and Abel are willing to afford the company.

(This is the Warren Buffett Watch newsletter, news and analysis on all things Warren Buffett and Berkshire Hathaway. You can sign up here to receive it every Friday evening in your inbox.)

Berkshire Hathaway CEO Greg Abel told CNBC the company is pursuing artificial intelligence opportunities on two paths.

In a live "Squawk Box" interview Wednesday morning, Abel said he sees providing energy to the growing number of AI data centers as a "significant opportunity for Berkshire and Berkshire Hathaway Energy" since he's long believed the biggest constraint for the buildout is having enough energy to operate the power-hungry facilities.

But, he said, the company will only sell energy to hyperscalers if there is "no impact to the rates of our other customers."

The other avenue is Berkshire's now almost $36 billion investment in shares of Google parent Alphabet that was initiated by Warren Buffett last year.

Abel said from the experience of Berkshire's own operating companies, he and Buffett knew AI was "going to have a significant impact on America and businesses," and "we saw Google as a significant player."

Abel did the interview from Japan, where he was visiting a Berkshire tool-making unit and meeting with executives of the "trading houses" in which Berkshire has significant equity stakes.

He said none of them mentioned rising Japanese interest rates as a "fundamental challenge right now."

And while Abel does not see "any type of immediate recovery" for U.S. homebuilders with a "bumpy road for a while," he expects Berkshire's newly acquired Taylor Morrison will be a "very strong asset" five to 10 years from now because the "American dream will continue to exist."

Abel acknowledged there is growing opposition in the country to the construction of new data centers for AI.

"There is a lot more pushback in the communities across the U.S."

He believes companies building data centers need to "seriously evaluate" the "reaction from communities," and address those concerns by using technologies that minimize water use, as one example.

Abel pointed out that in Iowa, where Berkshire has a substantial utility operation, data centers have provided "very, very substantial" tax relief for residents and provided revenues that support local services like schools, the police, and fire departments.

He argued a data center has to be a "welcomed member of the community."

In the interview, Abel described how Berkshire came to make a $10 billion purchase of Alphabet stock directly from the company this spring as Google's parent raised $80 billion to "fund investments in its world-class AI compute infrastructure to meet its unprecedented customer demand."

Noting that Buffett had initially purchased Alphabet shares for Berkshire's portfolio last year, Abel recounted he received a phone call on a Sunday morning in late May with an offer to participate in a large equity offering by Alphabet.

"They hadn't set the size but recommended that we consider 10 billion."

Abel replied he would "get back to them right away," and "very much consistent with how we manage Berkshire ... I called Warren and I said we had a significant opportunity to ... continue to invest in Google ... with a significant block." 

They agreed they were "comfortable" with a $10 billion purchase at a 6 1/2% discount "and then ultimately consummated the transaction."

Abel told Becky Quick that Berkshire Hathaway will continue to sell yen-denominated bonds as needed to make future investments in Japan, despite the nation's 10-year bond going just above 3% this week, its highest yield in 30 years.

He noted rates in Japan are "still relatively modest when you think about it." The U.S. 10-year yield is close to 4.8%.

Abel expects Berkshire will continue to hold its investments in Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp. "for many decades," saying he had "just exceptional discussions" with their managements.

"We've been building really strong relationships with each of the companies, and looking at other opportunities here in Japan, and for that matter, abroad."

Abel declined to comment on reports Berkshire might team with Tokio Marine on a major international acquisition.

In March, Berkshire paid $1.8 billion for a roughly 2.5% stake in the Japanese insurer and entered into a "long-term strategic relationship" to create "compelling" opportunities for both companies.

Abel did say the partnership is "very broad" and "there's no obligation to act on it."

"But if it were to make sense, both for Tokio Marine and for ourselves, of course, we'd love to pursue a transaction with them."

BECKY QUICK:  Welcome back, everybody.

Berkshire Hathaway first invested in Japan's five main "trading houses" just over six years ago, and it consistently increased its position. Berkshire now owns more than 10 percent of each of the top five. 

And the company's CEO, Greg Abel, is in Japan right now.

He joins us for a business update and what he's seeing there. And, Greg, it's great to see you. Thank you for joining us.

GREG ABEL:  Good morning, Becky. Great to be on "Squawk Box".

BECKY QUICK:  Good morning. Although I — I see it's evening there in Japan as we would anticipate.

Greg, let's talk a little bit about what you're doing there, why you're in Japan right now.

GREG ABEL:  Yeah. It really serves a couple of great purposes.

First of all, upon arriving, I was able to go visit Tungaloy. It's one of our operating units here based in Japan. It's part of IMC, a company that makes tool bits. So spent the afternoon up in Fukushima with our team there.

And it's really amazing story. We acquired it back in 2008. And over that period of time, really built a business from — from scratch.

It came out of Toshiba, but a relatively small company and three, so a number of significant plants up in Fukushima. So spent the day there touring it.

We have 15 hundred employees in Japan and really, just really unique.

Here's a company that has just under $240 million of sales in Japan and an incremental $400 million internationally.

So, very small group just doing remarkable things. And it's a — it's a great way to start a trip.

And then, obviously, been visiting with our — each of the five trading houses and Tokio Marine.

BECKY QUICK:  That purchase we first found out about six years ago, I think the purchase of those five trading houses that you all originally bought into.

At the time when we found out, I think it was around 5 percent that you owned of each of the trading houses.

You had made a deal with them, you and Warren Buffett, that you wouldn't buy more than 9.9 percent without their permission.

I think all of those houses have appreciated having Berkshire as a shareholder. You now own more than 10 percent in each of them.

A lot of that's been because those companies have been buying back shares, too.

But what — what is your long-term plan for these trading house positions? And what kind of partnership do you have with these companies?

GREG ABEL:  Yeah, you're absolutely right. It goes back to six years ago.

We actually announced it U.S. time. It was Warren's 90th birthday. And the next day it was announced in Tokyo and in Japan that we had acquired just over 5 percent.

And at that time, we communicated, it was really a long-term proposition, that we saw this as a long-term holding. And we looked forward at that moment to building a relationship with each of the five companies.

Three years later, we attended — were here in Tokyo — in 2023, and we met with each of the companies. And that was part of building the relationship because, one, we were very pleased with the underlying investment at that time.

At that point in time, our investment percentage had clicked over the 7 percent. And — and the businesses were performing well.

As you highlighted, they were purchased — really managing their capital well, purchasing shares back in, increasing their dividends, and their overall performance continued to improve.

And then, you're absolutely right. We — we highlighted and requested their approval that we — could we go over 10 percent?

Because up to that point, we'd always highlighted we would stay below 10 and only exceed it if the five management companies — or the five trading companies — agreed to us exceeding the 10 percent.

And then upon receiving their approval, we went above 10 percent.

And it's really, one, a long-term investment that we intend to hold for many decades.

And then, secondly, we've been building really strong relationships with each of the companies, and looking at other opportunities here in Japan, and for that matter, abroad.

And those are just exceptional discussions that each visit, we continue to build on the prior discussions and look at incremental opportunities.

BECKY QUICK:  And, Greg, I'll bring up the relationship with Tokio Marine and the percentage that you've bought into that.

There have been some reports recently suggesting that the Japanese insurer is on the look for a purchase, maybe even looking at Australia's Suncorp or Canada's IAG as a potential purchase acquisition.

These reports suggest that they would do this with Berkshire's balance sheet backing it up.

Can you tell us anything about what may be happening with some of those talks, and whether Berkshire would back, financially, those acquisitions, potentially?

GREG ABEL:  Yeah. The — we have a — right before our annual meeting, we announced the transaction with Tokio Marine.

And it's an exceptional opportunity because they are a great partner. And we were absolutely thrilled to be able to reach an agreement with them, where we have 2 1/2 percent of their quota share of their book, i.e., what they're underwriting. We have a 2 1/2 percent interest in the company.

And then we announced a strategic partnership.

But what I would highlight is that strategic partnership is very broad. And either of us can bring ideas back and forth to each other. There's no obligation to act on it.

But if it were to make sense, both for Tokio Marine and for ourselves, of course, we'd love to pursue a transaction with them.

And, as you would guess, we're not commenting on any of the specific companies you noted.

BECKY QUICK:  OK.

Greg, one of the things that you all did when you started making these moves into Japanese equities was to start issuing bonds in Japan, yen-denominated bonds.

And I think that's been a pretty profitable position for you all because of where interest rates have been with Japanese bonds.

We are talking this morning about how the Japanese 10-year bond has now yield — is now yielding the highest levels that we've seen in 30 years.

I believe, just according to the latest to the — to the latest filings, that you all have something north of $15 billion worth of Japanese yen-denominated debt.

How does that stand? Will you still issue that debt? What are the maturities on some of those things? And what does it mean to see higher interest rates in Japan?

GREG ABEL:  Yeah, it's very — it's very topical, obviously, here in Tokyo and in Japan, in the newspapers.

I will say, Becky, I found it interesting. Not a single one of the trading companies raised it as a fundamental challenge right now.

And because they're still, when you think about, they're talking about the — yeah — but they're still relatively modest when you think about it. I think the 10-year hit, just a 30-year high —

BECKY QUICK:  Yeah.

GREG ABEL:  And it's, yeah, it went right to three percent as you're highlighting.

So, I think they see it as very manageable.

And then from our perspective, you're right, we — we have a bond — a debt portfolio there in yen that pretty much reflects the cost basis of our investments. And the 10-year — or the remaining life on that debt is a little more than five years.

And so, we still have a significant carry, i.e., the difference between the dividend and the interest we're paying.

But I would highlight that we would envision still raising debt as appropriate in yen.

And at the same time, we do see the underlying companies earning performance growing. We do see an increase in dividends likely over the coming years and continued share repurchases.

So, yes, there's an incremental cost, but clearly within the various trading houses, we do see nice increases in the underlying return on capital they're delivering back to shareholders.

BECKY QUICK:  Greg, we spoke with Warren Buffett back in July right here on CNBC and talked to him about a lot of things.

But one of the interesting things he brought up was the Berkshire portfolio.

Obviously, you're running things. He said that you're the decision maker, but that you all talk frequently, almost daily. And that the position that was initiated in Alphabet, he said, was his.

I just wonder if you could talk a little bit about your relationship with Warren, how you all are doing, and how you're managing that portfolio at this point, the stock portfolio for Berkshire?

GREG ABEL:  Yeah, great.

Well, a great example of it is Warren turned 96 on Sunday.

So, before I left to come to Tokyo, stopped in, had a — had a great celebration with Warren as he — as he turned 96 with his family and friends. So, we had a very nice afternoon.

After that, flew here to Tokyo. And Warren absolutely loves the Japanese investments and the companies we've invested in. So, I could tell it wasn't easy for Warren that off I went to Tokyo.

But yeah, we have a great working relationship in that we discuss a variety of things on a regular basis.

So, we would had some discussions, even on Sunday, about our Japanese investments.

And I talked to him earlier this morning just to give him an update on — on how each of the meetings went and how the companies are performing.

But it's a — it's a very much a — just a dialogue we've always had.

We love talking business. We love talking about what we're seeing across our portfolio.

And you're absolutely right, relative to the Alphabet position, Warren initiated that probably close to 15 months ago or a little bit more. And so, he initiated the initial purchases in Alphabet.

We continued — or he continued — and we discussed it then and continue to discuss it — initiated a variety of purchases.

And then I want to say, in late May, I received a call on a Sunday morning to see if we wanted to participate in their upcoming equity offering.

Really, no terms or amount were set. And I said, well, I'd get back to them right away.

And very much consistent with how we manage Berkshire, but also how we — the governance around it, I called Warren and I said, we had a significant opportunity to invest in — continue to invest in Google, but in a — in a — with a significant block. Discuss the size.

They hadn't set the size but recommended that we consider 10 billion and Warren talk — Warren and I discussed the size. We discussed the size of discount. And I'd recommended 6 1/2 percent discount. And we were comfortable with that.

And we went back to them and highlighted, we would be interested in a block on those terms and then ultimately consummated the transaction. 

BECKY QUICK:  Why do you like Alphabet?

GREG ABEL:  I think from the — just from a real high level, obviously, we don't discuss the underlying specifics of any of the concepts in — around any of our equity investments.

But the one thing that is unique with Alphabet, and I guess we do see this across our other businesses, but number one, obviously, we all are seeing and feeling the impact of AI.

So, we knew it was going to have a significant impact on America and businesses.

We have a lot of visibility from within our companies as to how we're using AI, what type of benefits it's delivering. So that brought incremental interest.

And then we saw Google as a significant player.

Now, there's a lot more to Google than what I just said and why we like it. But those were the fundamental reasons as to why we took a serious look at Google and now have a significant investment in it.

BECKY QUICK:  Well, let me ask you a little more about AI and the data center buildout that's taking place.

You're somebody who spent decades working in infrastructure, building at Kiewit and also at Berkshire Energy. So, you understand one of the key places that's seen as a limiting factor for AI buildout, and that's energy.

Where are we right now in terms of — the terms of that data center buildout? Where do you see opportunities, specifically for Berkshire?

GREG ABEL:  Yeah. So, it's really interesting, as they continue to announce all the data centers and data center sites.

I've sort of always had a strong view that energy would be the constraint. I — and there'd be energy. We can produce the energy. It's, do we have a —  how long it would take to get the sites prepared and being in a position they could serve the data centers? And I continue to see that as a big constraint.

We'll come to one of the other challenges.

So — and — but we do still see it as a significant opportunity for Berkshire and Berkshire Hathaway Energy, in that, for example, if you look at Iowa, where we have a number of data centers — I want to say last year, approximately 8 percent of our load came from data centers.

And we see incremental load coming on, both customers requesting it and what we can serve.

But we've really operated to some pretty basic principles right from the —  from the get-go.

And we've shared that with each of the hyperscalers. We've — and it's really policy we've — we've discussed with our state, our governors, and our regulators.

And we highlighted we are interesting — we are interested in serving these hyperscalers, one, if there was no impact to the rates of our other customers.

And in fact, we've pretty much taken the approach there has to be a net benefit to our customers.

The communities have to understand the impact on water. And that has become much more manageable as they address that, and use, you know, the technologies that are available to minimize water use.

And then, and then lastly, the communities have to be open to having the data center in their community.

We very much believe in the fact that you have to be a welcomed member of the community.

Now, that's a decision the data center has to make. But we can encourage them to seriously evaluate where — the reaction from the communities.

And I know you've had many discussions around it. There is a lot more pushback in the communities across the U.S.

We have not had any specific site rejected to date. We're continuing to move forward on the — on the various sites we have under construction.

And our sites would be the energy infrastructure, not the data center site. But it has to be done on the terms and conditions I just highlighted.

JOE KERNEN:  Greg — there — if you don't define a narrative, if there's a vacuum, then other people are going to define it for you.

There's a piece in The [Wall Street] Journal today just — about the data centers— protect the earth, build more data centers.

Their need for reliable power drives innovation, while AI helps develop new clean technology.

It just points out this could be a once in a generation opportunity to clean up the electricity grid and to learn how to improve water quality across the board and accelerate technologies —

GREG ABEL:  Right.

JOE KERNEN:  — that, you know, that the people that don't like this, they're behind a lot of these technologies and you could act —

There's a need for so much power, it could actually generate the type of change that they're looking for.

But if you don't — if you don't sell it that way, they're going to sell it a different way. I guarantee it.

GREG ABEL:  No — Joe, you're absolutely right. I mean, the narrative around these is so critical. And it continues to evolve.

So, it really did start from the impact on rates. And were you impacting other customers?

You can see they've — as you've just highlighted, they've moved on from that narrative.

I would say that the water narrative is very strong coming from the data centers and how they minimize the use.

And now, there's starting to evolve to, you know, other narratives.

I think a very strong narrative on the side, at least in Iowa, where it's still a strong farming community — when we see both the energy infrastructure put in place and a data center put in place in an individual county or community, the tax relief, specifically on property taxes, and also revenues that come into the county to support other services, schools, police, fire. It's very, very substantial.

And that — and that's equally has to be part of the narrative and make sure people recognize the benefits that come with — with that type of development. 

BECKY QUICK:  Hey, Greg, let's shift gears a little bit and talk about housing, specifically in the United States.

Obviously, since the last time we spoke with you, you all bought — or you bought the — made the acquisition in Taylor Morrison for $6.8 billion.

We also saw in the latest filings that came out, you had increased the stake in Lennar.

So, these are just some of the ways that Berkshire kind of plays into housing.

But you have so many different places that you are kind of measuring how the housing market is doing, from the paints that you sell, from other things that go into housing — building — but also from the real estate portfolio and Berkshire Hathaway real estate that follows through all of that.

What do you see happening in the housing market, particularly as interest rates and mortgage rates are rising in the United States? 

GREG ABEL:  Yeah, it's really interesting, because it was an important part of the discussions with Taylor Morrison and the discussions I had with Sheryl [Palmer], their CEO, in that when we looked at housing, and housing specifically in North America, we were taking a very long-term view, that — that American dream will continue to exist.

And five years, and 10 years from now, this will be a very strong asset for Berkshire, i.e., Taylor Morrison.

And I'll come back. We did combine, and are combining, some of our operations from Clayton Homes.

We had 15 site — what we call site builders — but home builders — over in Clayton Homes. They're now joining the Taylor Morrison team.

But the conversation we were having, Becky, was that we didn't see any type of immediate recovery or any type of hockey stick there. That we did see it, from Berkshire's perspective, that it was going to be a bumpy road for a while.

And obviously, as you're discussing it with people in the industry, there's — and we've got a great leader in Sheryl and brings great optimism — but you can see as we discuss it.

We don't — we don't envision a quick recovery there. But we do see it as an industry that we definitely want to be invested in, and we're invested in, for the — for the long-term.

BECKY QUICK:  And Greg, just when you look at the economy in the U.S., around the world, how are things doing from a business perspective? How is the consumer doing?

GREG ABEL:  Yeah, it's really interesting.

I mean, here in Tokyo, incredibly vibrant. You can feel a great deal of energy.

And when I met with the — with the five companies, the trading houses — very strong results they're having and feel very good about their businesses.

And that would be — a number of them are resource based.

But a number of the businesses also have what they call non-resource businesses, and they're performing very well.

If you look across our businesses and our results through the second quarter, again, very strong in our larger businesses, including our manufacturing businesses.

So, you can see there's still — still strong demand.

But I think you do feel the customer — there's a consumer that is still clearly feeling the pain and struggling and having to stretch a lot further to — with that — with that dollar.

And I think that does exist. There's no question when we look at the underlying results.

But at the same time, the fundamentals around the economy, at least from what we're seeing through the — through the second quarter, remain very, very strong.

BECKY QUICK:  Greg Abel.

Greg, thank you very much for joining us this morning — this evening — in Tokyo. We appreciate it.

GREG ABEL:  Thank you, Becky. Thank you, Joe. Have a great day. Thank you very much. 

BECKY QUICK:  You, too.

JOE KERNEN:  Thanks, Greg.

BECKY QUICK:  Again, Greg Abel, the CEO of Berkshire Hathaway.

GREG ABEL:  Thank you.

Some links may require a subscription:

The Wall Street Journal: Warren Buffett Turned 96 on Sunday. Here Are Some of His Best QuotesFinancial Times opinion: Why Berkshire Hathaway might be an active hedgeCNBCTV18 (India): Warren Buffett turns 96: Key investing lessons from the Oracle of OmahaDallas Morning News on MSN: Berkshire Hathaway's NetJets to get massive new Love Field campusBRK.A stock price: $759,350.01

BRK.B stock price: $506.03

BRK.B P/E (TTM): 12.72

Berkshire Cash as of June 30: $365.5 billion (Down 8.0% from March 31)

Excluding Rail Cash and Subtracting T-Bills Payable: $359.2 billion (Down 3.8% from March 31)

Berkshire repurchased $4.5 billion of its shares in Q2 2026.

Berkshire's top holdings of disclosed publicly traded stocks in the U.S. and Japan, by market value, based on the latest closing prices.

Holdings are as of June 30, 2026, as reported in Berkshire Hathaway's 13F filing on Aug. 14, 2026, except for:

Mitsubishi, which is as of April 30, 2026The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

Please send any questions or comments about the newsletter to me at [email protected]. (Sorry, but we don't forward questions or comments to Buffett himself.)

If you aren't already subscribed to this newsletter, you can sign up here.

Also, Buffett's annual letters to shareholders are highly recommended reading. There are collected here on Berkshire's website.

-- Alex Crippen, Editor, Warren Buffett Watch

Berkshire Hathaway (BRKA -0.48%)(BRKB -0.41%) shares have risen by 236% over the past decade (as of Sept. 2). Critics are quick to point out that this performance came in lower than the total return of the S&P 500 index. It's easy to question the conglomerate's capital allocation decisions.

However, over the past six decades, Berkshire Hathaway's stock price has compounded at an annualized rate of 19.7%. This trounces the S&P 500 index's 10.5% average annual total return. The company's long-term track record is so extraordinary that even if the Omaha firm's shares fell by 99% tomorrow, they still would have beaten the benchmark over the trailing-60-year period.

Warren Buffett deserves all the praise. His successor, Greg Abel, is now tasked with directing capital allocation decisions for the massive $1.1 trillion enterprise. Investors hope that Berkshire Hathaway shares will outperform the S&P 500 index in the coming decades.

Here's the one stock that could help continue the streak under the new CEO.

Image source: The Motley Fool.

Apple remains Berkshire Hathaway's largest public equity holding Berkshire Hathaway first purchased Apple shares in the first quarter of 2016. Since the start of that year, the consumer technology giant's shares have climbed an astonishing 1,140%. At one point, this single business represented about half of the conglomerate's entire portfolio. Apple might just be the single-most successful investment Warren Buffett made based purely in terms of dollar-figure gains.

Starting in late 2023, the Apple holding has been trimmed considerably. But it remains the biggest position, accounting for more than 20% of Berkshire Hathaway's portfolio, which is currently valued at $73.8 billion. Based strictly on this size, Apple is the one holding that can actually have the most notable impact on Greg Abel's ability to beat the market.

The valuation can definitely be a concerning factor. Apple shares trade at a price-to-earnings ratio of 37.2. The stock has gotten slightly more expensive this year, up 19% in 2026. It's safe to say the current valuation leaves no margin of safety.

But there are valid reasons why this is an elite business, a perspective that can drive market sentiment and still introduce the possibility that the stock can produce winning returns. Nothing is guaranteed, though.

Apple possesses arguably the world's most valuable brand. It benefits from pricing power and customer loyalty. The powerful ecosystem keeps users locked in, supporting its competitive position.

And the financials are stellar. Apple's growth has picked up, thanks to strong demand for the iPhone 17 family, with revenue increasing by 16.2% year over year through the first nine months of fiscal 2026 (ended June 27). Profits are incredible, and free cash flow remains robust.

Premium Feature

Moneyball Superscore

88/100

Today's Change

(

-2.51

%) $

-8.24

Current Price

$

319.97

The odds aren't stacked in Greg Abel's favor Interestingly, Apple also welcomed a new CEO. John Ternus, a company veteran, just replaced Tim Cook, who led the business during a wildly successful run that saw the "Magnificent Seven" stock soar more than 2,200% over his 15-year tenure.

Ternus has big shoes to fill. This is also true of Abel, who I believe faces an uphill battle to achieve market outperformance.

It all comes down to scale. Berkshire Hathaway is one of the most valuable companies on the planet. Growing its intrinsic value by 20% per year simply might not be possible. It was much easier to accomplish this feat when the business was a lot smaller.

Size can be an inhibiting factor to growth. This also shows up elsewhere.

As of June 30, Berkshire Hathaway had $365.5 billion in cash and short-term Treasuries on its balance sheet, equal to 34% of the company's market capitalization. There aren't enough investment candidates that are meaningful enough to move the needle. No one knows if or when the opportunities will start to flow.

The cash gives Berkshire Hathaway an invaluable financial buffer that insulates it from adverse market and economic developments. However, that cash will continue to be a drag on performance.

Investing legend Warren Buffett handed over the chief executive officer reins of Berkshire Hathaway to Greg Abel at the start of the year. Before that, however, Buffett spent many quarters doing more selling of stocks than buying. Why did net sales exceed purchases for a long period? Buffett hasn't answered the question directly, but a comment he made in a recent shareholder letter offers us clear insight:

"Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities," Buffett wrote in the 2024 letter.

Today, Buffett remains chairman of Berkshire Hathaway, while Abel guides investment decisions. And in the recent quarter, Abel made a big move: Berkshire Hathaway just did the following thing for the first time in 15 quarters. History offers a clue about what might come next, but the evidence piling up suggests it may not repeat itself.

Image source: The Motley Fool.

Market-beating returns for 60 yearsSo, first, let's talk about why we pay close attention to Buffett's moves. The billionaire led Berkshire Hathaway to market-beating returns for 60 years -- that track record solidified Buffett's reputation as an investing superpower. And Buffett is known for sharing his thoughts and advice on investing, so investors may rely on this as well as his stock selections for inspiration.

Index

S&P 500 IndexToday's Change

(

1.06

%)

+

81.11

Index Level

7,747.71

Buffett hand-picked Abel as a successor, and the billionaire still participates at Berkshire Hathaway to a certain degree. As a result, investors continue to closely watch the company's moves. That brings me to the latest ones, in the second quarter of this year.

As I mentioned above, though Buffett is a strong fan of equities and has continued to buy them throughout market environments, he was a net seller over the past few years. In fact, Berkshire Hathaway was a net seller of stocks for 14 straight quarters -- this included the first quarter of this year under the leadership of Abel.

But in the second quarter, Abel departed from that trend, and for the first time since 2022, Berkshire Hathaway became a net buyer of stocks, with almost $20 billion in purchases. This included a big boost to the Alphabet position, lifting class A shares by 45% and class C shares by more than 600%. Alphabet class A stock now is Berkshire Hathaway's fourth-biggest holding after longtime favorite Coca-Cola.

What happened after 2022Now, let's consider what may happen next. History shows us that the last time Berkshire Hathaway was a net buyer of stocks, in the third quarter of 2022, the S&P 500 went on to soar -- and this bull market is ongoing.

^SPX data by YCharts

So, we might say that history suggests the S&P now will do the same and climb over the next few years. But it's important to consider other pieces of evidence, particularly relating to the valuation of stocks then and now, and the economic and geopolitical environment.

When Buffett was a net buyer of stocks in 2022, stocks looked a lot cheaper than they do today, and we can see this through the S&P 500 Shiller CAPE ratio, an inflation-adjusted look at stock price in relation to earnings per share.

S&P 500 Shiller CAPE Ratio data by YCharts

In fact, the Shiller CAPE ratio shows that stocks have reached one of their priciest levels ever. The last time stocks were more expensive was during the dot-com bubble back in 2000.

S&P 500 Shiller CAPE Ratio data by YCharts

Meanwhile, interest rate hikes were underway in 2022 to tame inflation; today, inflation is on the rise amid President Donald Trump's tariffs on imports and the conflict in Iran, and the Federal Reserve hasn't yet made a move on interest rates. That creates a certain level of uncertainty, something investors don't like.

All of this means that stocks are less likely to soar than they were back in 2022 when Buffett was a net buyer. Of course, this doesn't mean the S&P 500 will immediately decline. Stocks may have more fuel in the tank in the coming months and quarters. But overall valuations and economic headwinds suggest that a pullback could be on the horizon -- and this emphasizes the importance of investing in quality stocks and holding on for the long term.

Starting in the fourth quarter of 2022, Berkshire Hathaway (BRKA +0.35%) (BRKB +0.46%) became a net seller of stocks. This trend continued in every single quarter through the first quarter of this year. Greg Abel started his first three months as CEO maintaining what his predecessor, Warren Buffett, did.

But things changed in Q2, as the conglomerate bought $23.5 billion worth of stocks and sold $3.7 billion, becoming a net buyer for the first time in more than three years. During the first six months of 2026, Berkshire Hathaway cumulatively purchased $39.4 billion in equities and sold $27.8 billion. This was up dramatically from the $7.1 billion acquired (and $11.6 billion sold) in the same period last year.

Here's what Abel's been adding to the conglomerate's portfolio. Will he keep being aggressive going forward?

Image source: Getty Images.

Berkshire is making some big moves In the first half of 2026, Berkshire Hathaway trimmed its positions in Bank of America. It also reduced share ownership in Capital One and Kroger. These were the largest sell decisions.

The Omaha company's most notable purchase was Alphabet. Among both Class A and Class C shares, Berkshire Hathaway has made the internet enterprise the third-largest position in the entire portfolio.

It also added to Delta Air Lines, among other businesses.

As of Sept. 1, Berkshire Hathaway's public equities book was valued at almost $360 billion. This is a massive sum that's worth more than most companies out there.

Today's Change

(

0.35

%) $

2,663.63

Current Price

$

761,163.63

So much cash, not enough opportunities Berkshire Hathaway shareholders will definitely be encouraged by Abel's net buying spree through the first six months. It might be an early indication that the company is going to be more aggressive in allocating capital to public equities.

During the first six months of 2026, when Abel was a net buyer of stocks, the S&P 500 index traded at an average cyclically adjusted price-to-earnings ratio of 39.2. This was a 9.5% premium to the multiple over the first half of 2025. He's playing offense even though the overall market has gotten more expensive.

However, it's clear that the conglomerate's main problem hasn't gone away. Berkshire Hathaway continues to have way more cash than it knows what to do with. As of June 30, it had $365.5 billion in cash and Treasuries on the balance sheet. There will need to be plenty of sizable opportunities out there for this money to be allocated.

Abel has to deal with the issue of finding worthy investing candidates in a frothy market environment. It will be interesting to see if he remains a net buyer going forward.

Bank of America is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool recommends Capital One Financial, Delta Air Lines, and Kroger. The Motley Fool has a disclosure policy.

BOSTON & MADRID--(BUSINESS WIRE)--Berkshire Hathaway Specialty Insurance Names Maria Victoria Valentin-Gamazo Head of E&P and Head of C&BE for Spain.

Prior to its very large investment in Alphabet, it wasn't all that clear how Berkshire Hathaway (BRKA +1.37%)(BRKB +1.20%) planned to really participate in the artificial intelligence revolution, if at all.

Sure, the large conglomerate's largest stock holding is Apple, which is sure to benefit from AI, but Apple has seemingly been slower than its "Magnificent Seven" peers to fully flesh out its AI strategy.

Now, Berkshire's plan for AI is becoming much clearer. In fact, during an interview with CNBC, Berkshire CEO Greg Abel just quantified the company’s AI opportunity.

Image source: The Motley Fool.

Generating power for AIThe big immediate opportunity for Berkshire is through its subsidiary, Berkshire Hathaway Energy (BHE), which generates and supplies various forms of power to consumers and businesses.

It's worth noting that since the pandemic, Berkshire has loaded up on energy assets through acquisitions in BHE and large purchases of stocks like Chevron and Occidental Petroleum, which together make up about 9.4% of Berkshire's large $360 billion stock portfolio.

This was happening even as most analysts and economists called for lower oil and gas prices in the years ahead. But the team at Berkshire always seemed to have conviction in the energy sector.

"It's really interesting as they've continued to announce all the data centers and data center sites. I've sort of always had the strong view that energy would be the constraint," Abel told CNBC. "There would be energy; we can produce the energy. It's how long would it take to get the sites prepared and being in a position they could serve the data centers..."

Abel views this as an opportunity for BHE.

He noted that in Iowa, where BHE owns the MidAmerican Energy Company, Iowa's largest energy company serving more than 1.6 million electric and natural gas customers across four states, 8% of the total demand last year came from data center customers.

Today's Change

(

1.20

%) $

6.02

Current Price

$

508.35

While Abel said Berkshire is interested in working with the hyperscalers, he added that Berkshire has told them there cannot be a negative impact on other customers' rates; in fact, there must be a benefit.

BHE's U.S. utilities collectively own 32,400 net megawatts of generation capacity currently in operation and under construction, according to the company's 2025 annual filing.

Among its energy assets are four regulated utilities that produce power from wind, natural gas, coal, solar, hydroelectric, nuclear, and geothermal sources.

These utilities serve 5.4 million retail customers and five interstate natural gas pipelines with roughly 20,900 miles of operated pipeline.

BHE is also planning to spend about $33.5 billion between this year and 2026 to expand its power generation, storage, and transmission capabilities. In the three years prior, BHE spent slightly below $29 billion on capital expenditures.

Another reason to own BerkshireBerkshire is one of the few $1 trillion market cap companies not entirely banking on AI.

The company owns one of the largest insurance businesses in the U.S., a large railway network, a large mortgage company, a large energy company, a $360 billion stock portfolio, and roughly $365 billion in cash.

This diversity of businesses is one of the reasons the company can serve as a safe haven when economic conditions become more difficult, while also generating solid returns through the cycle.

And now investors can clearly see that Berkshire will benefit from AI, whether through its stake in Alphabet or its large power network.

BOSTON & PARIS--(BUSINESS WIRE)--Berkshire Hathaway Specialty Insurance Launches Surety in France, Names Stéphane Fauré to Lead New Offering.

Berkshire Hathaway (BRKA -0.60%)(BRKB -0.34%) has historically been one of the largest shareholders of U.S. banks, and that's still true today. The conglomerate maintains large stakes in Bank of America (BAC +0.08%) and American Express (AXP -1.81%), while also holding several smaller positions in the financial sector.

New CEO Greg Abel and his team might be souring on the banking industry, or at least might see good reasons to reduce exposure to it. In the most recent quarter, Berkshire sold shares of three bank stocks, while simultaneously pouring billions of dollars into the technology sector.

Image source: Getty Images.

There's more to the story, however. Here's a rundown of Berkshire's three bank reductions, and what investors should keep in mind.

Berkshire Hathaway was a net buyer of stocks in the second quarter for the first time in several years. But that's not the case when it comes to the financial sector. As mentioned, Berkshire reduced its stakes in three bank stock positions:

Capital One (COF -1.48%) was reduced by 58%, the sharpest percentage decline. Berkshire now owns about $646 million of Capital One stock, representing about a 0.5% stake in the company.Bank of America (BAC +0.08%) was reduced by $1.7 billion, as Berkshire sold 30.2 million shares. It now owns 483.4 million shares, and Bank of America remains one of the largest holdings in the portfolio.Ally Bank (ALLY -0.85%) was the smallest of the three sales, with Berkshire reducing its stake by 7%. Berkshire now owns 8.9% of Ally, a stake valued at about $1.14 billion.Let's put this in some context. Capital One experienced a significant reduction in its position. Berkshire sold about $750 million in the bank's stock (we don't know the exact selling price). Bank of America was the largest sale by dollar amount, and Berkshire has been gradually selling shares over the past few quarters, but it remains a massive part of Berkshire's portfolio. Even after the sale, Berkshire owns nearly 7% of Bank of America, a stake worth more than $30 billion.

Premium Feature

Moneyball Superscore

75/100

Today's Change

(

0.08

%) $

0.05

Current Price

$

61.99

Finally, don't read too much into the Ally sale. After the reduction, Berkshire owns about 9% of Ally and, for regulatory reasons, aims to keep this stake below 10%. So, this could simply be a sale to ensure that Ally buybacks wouldn't push it above the threshold.

Why did Berkshire sell bank stocks?To be sure, we don't know exactly why Berkshire sold. Leadership generally doesn't discuss the specific motivation behind individual transactions. There could be concerns about consumer credit deteriorating, which could explain the sharp reduction in credit card-focused Capital One, in particular.

Berkshire could also potentially be worried about interest rate risk. Rising interest rates are good for banks in some ways, but banks that typically offer minuscule deposit rates (like Bank of America) could have a tougher time competing in a "higher for longer" environment without raising deposit rates, which would cut into margins.

Another explanation could be valuation or position sizing. Between American Express and Bank of America alone, the portfolio is rather concentrated in the financial sector. The sector has performed extremely well in 2026, and this could be a bit of profit-taking in names that have made Berkshire quite a bit of money.

The bottom line is that we don't know for sure. And just because Berkshire sold shares of these stocks doesn't necessarily mean that you should do the same. Full disclosure: Bank of America is one of my largest investments, and I'm not selling a single share because Berkshire did. But it is causing me to take a step back and keep a closer eye on the health of the U.S. consumer to watch for cracks forming.

Bank of America is an advertising partner of Motley Fool Money. Ally is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Matt Frankel, CFP® has positions in American Express, Bank of America, and Berkshire Hathaway. The Motley Fool has positions in and recommends American Express and Berkshire Hathaway. The Motley Fool recommends Capital One Financial. The Motley Fool has a disclosure policy.

Berkshire Hathaway CEO Greg Abel joins 'Squawk Box' to discuss the company's investment in Japan, Berkshire's strategic partnership with Tokio Marine, impact of high Japanese bond yields, Berkshire' investment portfolio, his relationship with Warren Buffett, AI investment opportunities, data center growth opportunity, and more.

You are now leaving Barron's websiteBy clicking on the “Proceed” button below, you will be redirected to a third-party website owned and operated by Hong Kong Tiimoot Information Technology Co., Limited. (“HKT”), which is located in Hong Kong. That website operates independently from Barron's and Barron's does not control the website. The privacy practices of HKT are subject to its Privacy Statement, so please read it closely. We are not responsible for HKT's privacy or other data-related practices.

Berkshire Hathaway (BRKA -0.18%)(BRKB -0.19%) bought back $4.5 billion of its own stock in the second quarter, its most aggressive pace of buybacks in several years. Unlike many other companies that buy back stock, Berkshire can do so only when CEO Greg Abel and Chairman Warren Buffett agree that the stock is trading below its intrinsic value.

Are they right? Is Berkshire truly a cheap stock right now?

Of course, it's tough to do a full piece-by-piece analysis in a short article, but we can use the three main parts of Berkshire Hathaway's business to help determine if the stock is cheap or expensive.

Image source: Getty Images.

Berkshire: A sum of three parts As of this writing, Berkshire's market cap is about $1.09 trillion. If the sum of the parts is worth more than that, it's trading for less than its intrinsic value.

Thankfully, two of the three parts of the business are easy to value. At the end of the second quarter, Berkshire had $365.5 billion in cash and Treasuries on its balance sheet. And as I'm writing this, Berkshire's stock portfolio is worth about $360.5 billion. Subtracting these two numbers shows that Berkshire's operating businesses are being valued at about $364 billion.

Over the past four quarters, Berkshire has produced just over $48 billion in operating earnings. After subtracting investment income from the insurance business (which is mostly the interest earned on its cash), Berkshire's operating income was $35.8 billion.

This means that Berkshire's operating businesses are trading for about 10.2 times trailing earnings. That's a very low multiple. For context, the average stock in the S&P 500 trades for about 28 times earnings. The average energy company (a big part of Berkshire's business) trades for a mid-teen multiple, and the average railroad stock (Berkshire owns BNSF) trades for about 22 times earnings, just to name a few components.

Of course, there are many moving parts to consider, and not every sign points to a high valuation. For example, insurance companies are generally trading for a low double-digit earnings multiple right now, and Berkshire's GEICO has been underperforming its peers in recent years.

Having said that, there's a solid case to be made that Berkshire's intrinsic value is significantly higher than its current market value. Exactly how much higher is a tougher question to answer. If you were to ask 10 experienced stock analysts to calculate the intrinsic value of Berkshire's stock, you'd probably get 10 different answers. However, it's easy to see why Abel might have decided to step on the gas when it comes to buybacks, given the low value the market is assigning to its operating businesses.

Ten years ago this week, on Aug. 25, 2016, Berkshire Hathaway's (BRKA +0.27%)(BRKB +0.26%) B shares closed at $148.64. Ten years later, on Aug. 25 of this year, they closed at $504.32.

Berkshire pays no dividend, so the price is the whole return. A $10,000 investment became about $33,900.

The stock roughly tripled, compounding at about 13% a year. That's a good decade by nearly any standard. But the standard that matters most is what the same money would have earned elsewhere -- and that comparison doesn't flatter Berkshire.

Image source: The Motley Fool.

Berkshire did not beat the market over this stretch. The same $10,000 in the SPDR S&P 500 ETF Trust (SPY -0.23%), with dividends reinvested, grew to about $41,300 over the identical window -- about 15% a year, using the fund's dividend-adjusted price history. The index fund finished about $7,400 ahead on a $10,000 stake.

Some of that is timing. The decade belonged, arguably, to the giant technology companies that came to dominate the index, and lately to an artificial intelligence (AI) building boom. Berkshire's operating businesses -- insurance, freight, power -- mostly sit that race out.

The comparison is worth making anyway, because of what it says about where Berkshire's return came from. Investors didn't, for the most part, decide to pay more for each dollar Berkshire earns. The company earned more dollars.

The business roughly tripled, tooI think the more interesting part of the decade is how closely the stock tracked the company underneath it.

In 2016, Berkshire reported $17.6 billion of full-year operating earnings -- the measure Warren Buffett always told investors to watch, because it leaves out swings in the value of the stock portfolio. In 2025, the company reported $44.5 billion, about two and a half times as much -- though Berkshire has tweaked how it defines the measure over the years.

Per share, the growth was faster. Berkshire has been shrinking its share count through buybacks, from about 1.64 million Class A-equivalent shares in 2016 to about 1.43 million at midyear, about 13% fewer. Spread the bigger earnings over the smaller share count, and per-share operating earnings, as Berkshire reports them, nearly tripled -- roughly in line with the stock.

The growth hasn't been a straight line. Operating earnings slipped in 2025 from $47.4 billion in 2024. But the first half of this year ran 17% ahead of last year's pace, at $24.3 billion, with the BNSF railroad earning $2.9 billion, up about 10% year over year, the energy business up 11%, and the manufacturing, service and retailing group up 15%.

Insurance float grew, too, from about $91.6 billion at the end of 2016 to about $177.5 billion at midyear. Float is the premium money Berkshire holds and invests for its own benefit before claims are paid, and it has long been the engine of the company's compounding. A doubling of float doubles the money available to invest.

Those figures leave out the stock portfolio's gains and losses, though not its dividend income. The gains sit in a separate line Berkshire tells investors not to read too much into from one quarter to the next.

So most of the tripling, arguably, wasn't a change in the market's opinion of Berkshire. It was the business getting bigger, concentrated onto fewer shares.

Today's Change

(

0.26

%) $

1.30

Current Price

$

505.00

Is the stock still a bargain?And the business is still getting bigger. Second-quarter operating earnings rose 16% year over year, and Berkshire repurchased about $4.5 billion of its own stock during the quarter, after $235 million in the first.

Investors have noticed. At about $504 as of this writing, shares sit about 6% below their 52-week high of $537.74, and Berkshire's market value is about $1.1 trillion. Set against the second quarter's operating earnings taken at an annual rate, that works out to about 21 times operating earnings.

To be fair, a stock screener will show a far lower price-to-earnings ratio, near 13. But that figure leans on reported net income, which includes investment gains that swing wildly from quarter to quarter -- Berkshire itself tells investors those amounts are usually meaningless over short periods. The operating measure is the honest one, and on it, the stock is no longer the bargain it arguably was earlier in the decade.

Of course, the index won this decade, and if AI spending keeps carrying the market, it can keep winning. But Berkshire's 10-year math tells a simpler story. The stock roughly tripled because the business roughly tripled. At about 21 times operating earnings, a buyer today is paying for that to continue.

New CEO Greg Abel led Berkshire Hathaway to buy more stocks than it sold recently. Google has grown into the third largest position in the Berkshire Hathaway equity portfolio. Google is establishing itself as an artificial intelligence leader through cloud and device partnerships.

Warren Buffett handed over the CEO reins of Berkshire Hathaway (BRKA -0.15%)(BRKB -0.21%) to Greg Abel at the start of 2026. Buffett gave his successor a big welcome gift: nearly $400 billion in cash on the company's balance sheet. That number was down to around $365 billion by the end of the second quarter, as some of it was allocated to public stocks. But Abel did make one notable acquisition: Taylor Morrison Home.

Taylor Morrison Home was a relatively small deal In the grand scheme of things, the roughly $8.5 billion Berkshire Hathaway spent to buy Taylor Morrison Home was modest. For comparison, the company added $17 billion to its investment in Alphabet (GOOG +1.05%), the parent of Google, a publicly traded company. But the acquisition of Taylor Morrison Home is a far more telling move regarding how Greg Abel will manage the company. And it hints at an important change from the way Warren Buffett did things.

Image source: Getty Images.

In the press release announcing the Taylor Morrison Home acquisition, Abel stated, "Over time, we expect to unify our site-built homebuilding operations into a combined platform enabling us to deliver the dream of homeownership to more Americans." Essentially, Abel is telegraphing a plan to integrate the company's housing businesses into one business unit. That is probably a good idea, but that type of integration isn't something Buffett has historically focused on.

Today's Change

(

-0.21

%) $

-1.04

Current Price

$

495.82

Buffett was a hands-off manager, buying companies and letting the leadership continue to operate them as they saw fit. As long as there weren't any big problems and he trusted the leadership team in place, Buffett was content to watch from the sidelines. That resulted in overlapping businesses. The Taylor Morrison Home deal suggests Abel sees the overlaps as an opportunity.

A small direction change for Berkshire Hathaway It is highly unlikely that Abel will make drastic changes to how Berkshire Hathaway operates. However, the goal of merging similar businesses into one business unit could help improve the company's financial performance. This type of internal change will be a new focus, even though it isn't likely to be a huge shift. But given the number of companies that Berkshire Hathaway owns, even this small shift could have significant positive long-term implications for investors. Notably, it could also lead to more targeted deal-making as the company seeks bolt-on acquisitions that enhance its existing operations, as Taylor Morrison Home did.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy.

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

The stock market has given investors plenty of reasons to stay invested during President Trump’s second term. Since Jan. 20, 2025, the S&P 500 has gained roughly 28%, according to market data, despite a stomach-churning detour in April 2025. After Trump unveiled sweeping tariffs on April 2, the index fell more than 12% in just four trading days, before recovering as the administration paused many of the levies.

That rebound has helped produce a steady stream of new highs — and Trump’s portfolio has been busy along the way too. After executing 3,642 transactions in the first quarter, his latest disclosure shows another 1,000-plus trades in June.

Trump Keeps Trading While Markets Keep Climbing The latest OGE Form 278-T shows 1,051 securities transactions during June, worth between $78.1 million and $263.1 million. More than 550 were purchases and more than 450 were sales.

Some of the larger disclosed moves included:

Company Notable Q2 Move Berkshire Hathaway (NYSE:BRK-B | BRK-B Price Prediction) Bought $1 million to $5 million Visa (NYSE:V) Bought $1 million to $5 million Mastercard (NYSE:MA) Bought $1 million to $5 million Cintas (NASDAQ:CTAS) Bought $1 million to $5 million Meta Platforms (NASDAQ:META) Sold $1 million to $5 million Motorola Solutions (NYSE:MSI) Sold $1 million to $5 million The filing also shows Trump’s accounts moving in and out of Palantir Technologies (NASDAQ:PLTR), including a purchase on June 3, sales on June 16 and 18, and additional purchases on June 23 and 24. The largest single disclosed transaction was a $5 million to $25 million sale of a Vanguard dividend ETF on June 22.

Be careful about treating these as Trump’s personal stock picks. The White House says independent managers oversee the accounts using computer-based strategies designed to track indexes. Direct indexing can require hundreds of individual transactions, including sales designed to harvest tax losses.

While the explanation matters, it doesn’t eliminate the ethical question.

A 28% market surge meets a frantic 1,000-trade frenzy. Discover the legislative loophole fueling a presidential portfolio worth millions. The Conflict-of-Interest Problem Isn’t Going Away The ethical concern is less about any individual trade than the overlap between Trump’s policymaking and his investments. 

His June filing, for example, shows Palantir Technologies trades before and after the June 14 U.S.-Iran peace agreement, including a sale of as much as $1 million on June 18 followed by purchases on June 23 and 24. Palantir is a major government contractor, making it more directly exposed to federal defense and procurement decisions than companies such as Berkshire Hathaway or Meta Platforms. 

That doesn’t prove Trump directed the trades or acted on nonpublic information — his investment accounts are reportedly independently managed — but it illustrates why presidential stock trading raises an ethical question even without evidence of misconduct.

Congress Is Trying to Fix the Problem — Sort Of Ironically, Congress just demonstrated how incomplete the stock trading rules remain.

On July 22, the House passed the Stop Insider Trading Act, H.R. 7008, by a 232-198 vote. The bill would generally prohibit members of Congress, their spouses, and dependent children from purchasing individual stocks while requiring advance notice of certain sales. Yet, the legislation exempts the president and vice president. An amendment that would have extended the restrictions to the executive branch was defeated in the House Rules Committee.

The bill has since reached the Senate, but its prospects are poor after House Republicans attached a voter-ID provision that Democrats oppose.

For investors, the bigger lesson is straightforward. Don’t copy Trump’s portfolio. The filings arrive weeks — sometimes months — after trades occur, disclose ranges rather than exact amounts, and may reflect automated index strategies rather than convictions about individual companies.

Key Takeaway Trump’s frenetic trading is fascinating, but it isn’t an investment signal. The S&P 500’s roughly 28% gain since his inauguration demonstrates that investors who stayed disciplined through the 2025 tariff crash have been rewarded.

Smart investors should take the same approach now: own businesses with durable earnings and cash flow, diversify across sectors, and assume Trump’s policies can create volatility without attempting to trade every headline.

In short, the most useful thing about Trump’s 1,000-plus trades isn’t discovering what he bought or sold. It’s remembering why ordinary investors should build portfolios that don’t require knowing what the president will do next.

Contact [email protected] for any questions or corrections.

Gross US federal debt crossed $40 trillion on Wednesday, August 19, 2026. That same day, Treasury announced it would “at least double” its buyback operations, from $2 billion to at least $4 billion, targeting the 10-to-20 year and 20-to-30 year portions of the curve, running September 9 through November 4. Long yields obliged: the 30-year closed down 9 basis points at 5.196% and the 10-year fell 5.7 basis points to 4.647%. By Thursday the relief was gone, with the Financial Times reporting “US long-term bonds slide as Bessent intervention fails to soothe investors.” The 30-year yield sat at 5.19% on August 19, and it has stayed above 5% every session this month.

US gross debt-to-GDP is 125.8% per the IMF, with only eight nations ranking higher, led by Japan at 204%. Interest payments already exceed what the US spends on either national defense or Medicare. BofA projects the debt reaches $50 trillion by 2029.

Why the Long End Will Not Cooperate CNBC attributes the run-up in long yields to a higher term premium, a changing Treasury buyer base, and increased corporate debt supply tied to artificial intelligence buildouts competing for the same capital. Mohamed El-Erian called the planned purchases “small in both absolute terms and relative to net issuance” and part of “a broader deployment of yield curve control.” Peter Boockvar of One Point BFG Wealth Partners was blunter: “This is NOT a debt paydown, it is just a rearrangement of the maturity schedule of Treasuries.”

Retiree’s Actual Problem A 5%-plus 30-year coupon looks generous until you remember what you are locking in: a fixed nominal payment from an issuer whose debt is compounding faster than forecasters expected. Short T-bills and bonds held to maturity are different. Duration is where the damage lives. That framing explains how Berkshire Hathaway (NYSE:BRK-B | BRK-B Price Prediction) is positioned under CEO Greg Abel, who has begun deploying the cash pile in his first full year while Warren Buffett remains chairman. Berkshire’s 13F as of 06/30/2026, filed 08/14/2026 leans hard on operating businesses with pricing power.

American Express: The Premium Flywheel American Express (NYSE:AXP) was the largest disclosed holding at $51.3 billion, 17.1% of the disclosed portfolio. Q2 revenue grew 10% with EPS of $4.53, and U.S. consumer spending rose 11%. Shares pay a $0.95 quarterly dividend. Risk: AXP is a credit business, and delinquencies rise if unemployment does.

Coca-Cola: The Coupon That Grows Coca-Cola (NYSE:KO) sat at $32.5 billion, 10.9% of the disclosed portfolio, equal to 9.3% of Coca-Cola’s shares outstanding. Q2 organic revenue grew 6% and unit case volume rose 5%. The quarterly dividend is $0.53, up from $0.485 in 2024. Risk: at a P/E of 27, the multiple leaves little room for error.

Occidental Petroleum: The Real-Asset Hedge Occidental Petroleum (NYSE:OXY) was $12.9 billion, 4.3% of the disclosed portfolio. Q2 revenue was a double-digit year-over-year gain, with realized crude at realized crude prices well above prior-year levels. The dividend was raised to $0.28 quarterly. Risk: OXY’s earnings live and die by the oil strip.

What to Watch The Treasury’s buyback runs through November 4. If the 30-year cannot hold below 5% while the government is actively bidding for its own paper, the signal is that the marginal buyer wants more compensation. For a pre-retiree, the real questions are how much duration to accept from an issuer whose fiscal path is worsening, and how much of a portfolio should sit in businesses that can raise a price when the coupon cannot (that second question is the whole premise of a dividend ladder built to throw off income without ever selling a share, which we walked through in a free guide here: Never Touch the Principal).

Contact [email protected] for any questions or corrections.

After six decades of steering clear of investments in department stores, Berkshire Hathaway (BRKA -0.24%) (BRKB -0.04%) is suddenly investing in a retail icon. I'm talking about Macy's (M -3.08%), the legendary retailer.

Berkshire's last department store investment was Hochschild Kohn, a Baltimore-based retail chain, back in the 1960s, but apparently it didn't go as planned, so CEO Warren Buffett became wary of traditional retailers.

Image source: Getty Images.

Berkshire first invested in Macy's in the first quarter of this year, buying about 3 million shares, a 1% stake in the retailer valued at around $55 million. It significantly increased its stake in the second quarter to 7.37 million shares. At a share price of $23.55, Berkshire's investment in Macy's is now worth about $174 million. That's about 2.8% of Macy's outstanding shares.

To be sure, that's a small investment for the massive conglomerate, which holds stakes worth tens of billions of dollars in companies like Apple, American Express, and Google parent Alphabet. And Berkshire's latest investments, mainly in Alphabet, are in tech stocks quite different from a retailer founded in 1858.

So what is the sudden appeal of Macy's stock for Berkshire?

Today's Change

(

-3.08

%) $

-0.72

Current Price

$

22.68

First-quarter results were impressive Well, Macy's had a strong first quarter, its best in four years. Revenue climbed 2% to $4.9 billion, and net income soared 66% to $63 million. Earnings per share rose 77% to $0.23. All of those beat Wall Street expectations. Management also raised its full-year outlook. It sees sales of between $21.5 billion and $21.75 billion, with earnings per share somewhere between $2 and $2.25.

Yet analysts who cover the stock don't seem to expect much upward price movement. The average price target is $22.77, nearly $1 below the current price. Of the 13 analysts who follow it, 10 have the stock as a hold, two as a buy, and one as a sell.

Yet perhaps Berkshire is impressed by the ongoing turnaround at the retailer, which also owns Bloomingdale's department stores and Blue Mercury, a luxury beauty and spa retailer. Two years ago, Macy's launched a strategy to close some 150 underperforming stores and focus on 350 others, many of which it will upgrade with a better customer experience.

The stock is also relatively inexpensive, trading at just about 10 times trailing-12-month earnings. We know that Berkshire loves a bargain or, more likely in this case, a stock it considers undervalued by the market.

American Express is an advertising partner of Motley Fool Money. Matthew Benjamin has positions in Alphabet and Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, American Express, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.

After 14 consecutive quarters as a net seller of equities, Berkshire Hathaway's (BRKA +0.01%) (BRKB -0.09%) cash reserves dropped from nearly $400 billion at the end of the first quarter to roughly $365 billion by June 30, marking a clear strategic pivot under new CEO Greg Abel.

During the second quarter, the investment conglomerate purchased about $23.5 billion in stocks while selling only $3.7 billion -- producing net buying activity of nearly $20 billion. These moves, combined with Berkshire's recent share repurchases and selective acquisitions, signal that the company's leadership finally sees some attractive opportunities after years of patience and cash accumulation.

Image source: The Motley Fool.

Breaking down Berkshire's portfolio Earlier this year, Abel oversaw a significant cleanup of Berkshire's portfolio, trimming or exiting several smaller positions to concentrate capital in higher-conviction holdings. According to Berkshire's 13F filings, sales included substantial reductions in Bank of America, Capital One, Kroger, DaVita, Ally Financial, and Nucor, as well as complete exits from Constellation Brands and Amazon.

On the acquisition front, Berkshire closed its $9.7 billion purchase of Occidental Petroleum's chemicals business in January and completed the $6.8 billion all-cash acquisition of homebuilder Taylor Morrison last month.

Share buybacks are also ramping up, totaling more than $4 billion during the second quarter alone. Taken together, these actions reduced Berkshire's cash pile while reallocating capital into both wholly owned businesses and public companies.

BRK.B Stock Buybacks (Quarterly) data by YCharts

Alphabet emerges as a magnificent holding The new commitment that stands out in Berkshire's portfolio is Alphabet (GOOGL -0.05%) (GOOG -0.09%). Berkshire first established a position in the internet giant during the third quarter of 2025 and has steadily increased its exposure in 2026.

During the second quarter, Berkshire dramatically expanded its stake in Alphabet. A pivotal piece was executing a $10 billion private placement in June, split evenly between Alphabet's Class A and Class C share classes. The company made additional open-market purchases to further enlarge the position. What began as a modest foothold has swiftly become a core holding in the portfolio, reflecting conviction in Alphabet's long-term competitive advantages and growth trajectory.

Today's Change

(

-0.05

%) $

-0.18

Current Price

$

344.02

How to interpret Abel's measured signal Berkshire's reduction in cash and return to net equity buying do not signal a broad market bottom or an abrupt change in the company's investment philosophy. Remember, Berkshire still holds more than $360 billion in liquidity -- preserving its fortress balance sheet.

The recent buying activity suggests Abel and his leadership team have identified a specific value that outweighs the safety of short-term Treasuries. Alphabet's elevation to core status, alongside incremental acquisitions and stock buybacks, underscores a long-standing preference for durable competitive moats and reasonable valuations.

Ultimately, Berkshire's cash deployment indicates that Abel is prepared to put capital to work when the right opportunities emerge, while remaining characteristically disciplined about price and long-term appreciation.

Bank of America is an advertising partner of Motley Fool Money. Ally is an advertising partner of Motley Fool Money. Adam Spatacco has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Berkshire Hathaway. The Motley Fool recommends Capital One Financial, Constellation Brands, Kroger, and Occidental Petroleum. The Motley Fool has a disclosure policy.

Home-builder stocks are cheap, but it's not easy to time a rebound in the depressed housing market.

Warren Buffett, the legendary CEO of Berkshire Hathaway (BRKA +0.83%) (BRKB +0.95%), stepped down from his role at the beginning of 2026. His successor is Greg Abel, who previously served as the vice chairman of the conglomerate's non-insurance operations. This change in management likely won't have a substantial impact on how Berkshire Hathaway operates, including its portfolio management. Buffett is still deeply involved with the company, and Abel embraces the Oracle of Omaha's investing philosophy.

Case in point: Since Abel took over -- and other than getting rid of some positions formerly managed by Todd Combs, who recently left the company -- Berkshire Hathaway has doubled down on stocks Buffett loves. Two excellent examples are Apple (AAPL +1.45%) and Alphabet (GOOG -0.05%) (GOOGL +0.06%). These two combine for 34.7% of Berkshire Hathaway's portfolio. Here's why both stocks have a great future.

Image source: The Motley Fool.

1. Apple -- 22.04% of the portfolio Apple has been Berkshire Hathaway's largest holding for a long time, even though the conglomerate has trimmed its position in the iPhone maker in recent years (but not during the second quarter). Buffett once said that Apple is probably the best business in the world. That's high praise, and it's entirely warranted. Apple generates consistent earnings and cash flows thanks to its popular devices, especially the iPhone.

The iPhone almost functions like a subscription that hundreds of millions of people renew every few years. Apple's customers are highly loyal. Because the iPhone has unique features and ways to interact with other devices within the company's ecosystem -- not to mention the large amount of data that is a pain to transfer to a competitor's platform -- Apple boasts a wide moat from high switching costs.

Today's Change

(

1.45

%) $

4.44

Current Price

$

310.03

The company still has significant growth opportunities. For instance, Apple has been integrating artificial intelligence (AI) features to improve its devices. This could help increase renewal rates and even bring new people into its ecosystem. Apple has an advantage, as it boasts more than 2.5 billion active devices in circulation, enabling it to distribute AI services very rapidly, including via software updates.

This massive user base also enables it to understand how people interact with AI features and make adjustments as needed. Elsewhere, another important opportunity for the company is its high-margin services segment, which should help lift profits and margins in the long run as it continues to expand. Apple recently fell after its third-quarter fiscal year 2026 update, which ended on June 27. The company's results were strong, but it posted weak guidance partly due to supply constraints.

So, the stock may remain volatile in the short run, but this is nothing those focused on the long game should worry about. Apple still has attractive long-term prospects, and investors should stay the course.

2. Alphabet -- 12.62% of the portfolio Berkshire Hathaway first initiated a position in Alphabet in the third quarter of 2025. Buffett himself was behind this decision. And since then, the conglomerate has doubled down. During the second quarter, Berkshire Hathaway substantially increased its stake in the tech leader. That makes sense. Alphabet seems to be firing on all cylinders. Revenue and earnings growth have been excellent in recent quarters, especially in the company's cloud computing segment.

Alphabet may not be the largest cloud provider, but compared to its peers, it may be just as strong -- if not stronger -- in perhaps what matters most right now in the industry: Helping companies build, deploy, and run AI applications. Alphabet noted that its AI business is contributing meaningfully to Google Cloud's strength, and there is more where that came from.

Today's Change

(

-0.05

%) $

-0.17

Current Price

$

341.28

Alphabet ended the second quarter with $514 billion in cloud backlog, versus a trailing-12-month revenue of $446.31 billion for the entire business. Alphabet should continue to ride the AI wave and post excellent financial results for the foreseeable future. Now, some may point out that the company's free cash flow turned negative in the second quarter due to heavy AI-related investments.

Also, Alphabet is facing thousands of lawsuits over the alleged harm YouTube has caused consumers, especially younger ones. Even with these caveats, Alphabet's underlying strength and significant growth opportunities across cloud computing, streaming, and its core digital advertising market make the stock a no-brainer buy.