Although Warren Buffett stepped down as CEO of Berkshire Hathaway at the end of last year, he’s likely still involved in capital allocation decisions behind the scenes. CEO Greg Abel is now running the show.
Based on recent investments that the conglomerate made, the Oracle of Omaha and his successor are incredibly bullish on a monster artificial intelligence (AI) stock.
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Alphabet (GOOGL 1.26%) (GOOG 1.24%) recently revealed plans to raise nearly $85 billion in equity capital to fund its AI infrastructure investments. This announcement wasn’t the only surprise.
The market also learned that Berkshire Hathaway will invest $10 billion through a private placement, evenly split between Alphabet’s Class A and Class C shares. This will significantly increase the company’s stake in the “Magnificent Seven” stock, as the conglomerate owned nearly 58 million Alphabet Class A shares as of March 31, making it the fifth-largest holding.
Today’s Change
(-1.26%) $-4.64
Current Price
$363.67
Key Data Points
Market Cap
$4.5T
Day’s Range
$360.55 – $366.14
52wk Range
$162.00 – $408.61
Volume
870.8K
Avg Vol
29.1M
Gross Margin
60.43%
Dividend Yield
0.23%
There are some key takeaways from this news.
Even the most financially sound enterprises need more capital than anticipated to fund the AI boom. Meta Platforms might also raise fresh equity capital to power its AI ambitions. The level of spending across the industry is groundbreaking.
With Berkshire Hathaway on its side, though, Alphabet is receiving a valuable stamp of approval, which might signal confidence to the rest of the market.
And with Abel now in the CEO seat, the latest moves might indicate that the conglomerate is further warming up to the tech sector.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, and Meta Platforms. The Motley Fool has a disclosure policy.
