Key Points
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Berkshire Hathaway’s investing philosophy hasn’t changed since Greg Abel took over.
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The conglomerate owns two stocks that are well-positioned to capitalize on the AI boom over the long run.
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Warren Buffett, the legendary CEO of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB), 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 (NASDAQ: AAPL) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). These two combine for 34.7% of Berkshire Hathaway’s portfolio. Here’s why both stocks have a great future.
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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.
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.
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.
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Prosper Junior Bakiny has positions in Alphabet and Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
