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Berkshire's New CEO Makes Massive AI Play on Alphabet
30 May
Summary
- Berkshire Hathaway's new CEO Greg Abel tripled its Alphabet stake.
- The move signals a significant bet on artificial intelligence by Berkshire.
- Alphabet's capital expenditures are now between $180B-$190B this year.
Greg Abel, Warren Buffett's successor, has significantly altered Berkshire Hathaway's portfolio in his first quarter as CEO. The conglomerate, valued at approximately $332 billion, notably tripled its stake in Alphabet (GOOG/GOOGL), making it the fifth-largest position and representing 6.7% of the portfolio.
This substantial investment is interpreted as a clear bet on artificial intelligence, a sector where Alphabet is heavily investing. The company recently raised its capital expenditure guidance to between $180 billion and $190 billion for the year. This contrasts with a more cautious approach seen in other Magnificent Seven stocks.
While this increased spending on capital expenditures may reduce Alphabet's free cash flow, a metric previously favored by Buffett and the late Charlie Munger, it underscores Berkshire's strategic pivot. This move positions Berkshire to capitalize on the evolving AI landscape.
