As one of the world’s most watched investment institutions, every quarterly change in Berkshire Hathaway’s investment portfolio captures the market’s attention. Although Warren Buffett is soon to step down, the company continues to be led by an outstanding investment team, and its investment decisions consistently provoke in-depth analysis. The newly disclosed third-quarter report reveals that Berkshire made a series of significant adjustments, including further reducing its largest holding, Apple Inc. (AAPL), and establishing a substantial new position in another tech giant.
In the third quarter, Berkshire Hathaway once again reduced its Apple stock holdings by 15%, bringing its total share count down to approximately 238 million. Even after this reduction, Apple remains the top position in its equity investment portfolio with an end-of-period value of $60.6 billion, accounting for 21% of the total portfolio. However, the act of reduction itself sends a clear signal. This move aligns with Buffett’s historical investment philosophy; he has stated that when deciding to sell an asset, he typically prefers to exit completely rather than reduce the position partially.
For an investment institution of Berkshire’s massive scale, both building and exiting positions take time. Since the beginning of 2023, the company has cumulatively reduced its Apple stake by 74%. This sustained action is interpreted by the market as preparation for an eventual complete exit from Apple. Although Apple’s stock price has recovered somewhat during the year, market speculation suggests that potential tariff pressures and a relatively conservative stance in its AI strategy might be partial reasons for shaking Berkshire’s long-term confidence.
Contrasting with the reduction in Apple, Berkshire made a significant new position decision this quarter: purchasing over 17.8 million shares of Alphabet (GOOGL) stock, with an end-of-period value exceeding $4.3 billion, constituting 1.6% of its investment portfolio. This move highlights the continuation of its core value investing philosophy – seeking companies trading below their intrinsic value.
Alphabet had previously faced challenges, including a federal judge ruling that its search business engaged in monopolistic practices and market concerns that AI tools like ChatGPT could threaten its core search business. However, regulatory risks eased as the court did not mandate the breakup of its key businesses and allowed it to continue paying to maintain its search engine’s default status. Simultaneously, the AI features launched by the company itself have gradually bolstered investor confidence in its ability to maintain its leading position in the search market.
Among the many high-flying tech companies, Alphabet’s forward P/E ratio is at the lower end of the industry spectrum, and its valuation is significantly lower than companies like Tesla. Beyond its dominant search business, Alphabet also possesses several high-growth potential segments, including YouTube, Google Cloud, the autonomous driving company Waymo, and its in-house chip development business. This combination of being “low-priced” and having diversified business lines is precisely the key factor attracting Berkshire Hathaway’s heavy bet.
