A securities report released late Friday Filing documents show that as the Buffett era draws to a close, Berkshire Hathaway ventured into new territory in the quarter ending September 30: making its first purchase of Google shares . Boosted by this, the search engine giant surged more than 5% intraday on Monday, a stark contrast to the performance of other tech giants, and market focus shifted to a new model that may be released this week.
New Goals
In its earnings report released earlier this month, Berkshire Hathaway once again demonstrated a cautious approach to its investment portfolio in the third quarter. Its cash reserves reached a record high of $381.7 billion, marking the 12th consecutive quarter of reducing its holdings of U.S. stocks, and it remained lukewarm on the issue of share buybacks.
In its 13F report released after the market closed on the 14th, Berkshire Hathaway reduced its stake in Apple as widely predicted. and Bank of America Two major holdings, and also Domino's Pizza and insurance Berkshire Hathaway adjusted its portfolio with Chubb Group and homebuilder DR Horton. Surprisingly, as of the end of the third quarter, Berkshire Hathaway newly acquired nearly 18 million shares of Google stock, making it its tenth largest holding.
This investment is considered one of Berkshire Hathaway's most significant bets in the technology sector in years. Given the legendary investor's decade-long skepticism towards high-growth tech companies, this move has surprised many who follow Buffett.
The investment in Google likely came from one of Warren Buffett's two deputies—Todd Combs or Ted Weschler. Their influence over Berkshire Hathaway's $300 billion stock portfolio is currently growing. However, judging from the size of the holdings, this investment likely has Buffett's approval. Buffett will step down as Berkshire Hathaway's CEO at the end of this year. Previously, many of Berkshire Hathaway's technology-focused investments were led by these two deputies, including the initial investment in Amazon in 2019. Stocks. As of now, Berkshire Hathaway still holds $2.2 billion worth of Amazon stock.
Bill Stone, chief investment officer at Glenview Trust Company, said the investment in Google may reflect a broader shift in the company's technology investment strategy as leadership transitions to a new generation. "The investment in Google likely marks a move by [Berkshire] to expand its 'circle of competence' into more technology sectors."
According to data compiled by the London Stock Exchange Group (LSEG), despite its rising share price, Google's valuation remains lower than many of its large tech peers driven by AI businesses. Its forward P/E ratio for next year is 25.5, while Microsoft... Broadcom and Nvidia These figures are 32.0 times, 50.8 times, and 41.9 times, respectively.
In a report to clients, CFRA analyst Angelo Zino stated, "We believe Berkshire Hathaway may be more willing to invest in Google compared to other tech stocks. This is because Google's core business has strong free cash flow potential, and with overall revenue growth momentum being strong, its forward P/E ratio of approximately 22x for 2027 is attractive."
The Oracle of Omaha has previously admitted that missing out on investing in Google was one of the biggest investment mistakes of his career. In fact, he had the opportunity to participate in Google's investment much earlier: Berkshire Hathaway's auto insurance company , Geico, was one of Google's earliest major advertisers. In the early days of online marketing, Geico paid Google about $10 for every click a user made on one of its search ads. "I witnessed firsthand the effectiveness of Google's products and knew how high their profit margins were (at the time). But my understanding of the tech industry wasn't deep enough to judge whether Google could truly stand out from the competition and maintain its leading position."
New Highlights
This year, Wall Street is concerned about Google's artificial intelligence. The company has shown a positive attitude towards its AI business. In the eyes of Wall Street investors, its stock price has transformed from a "loser in the field of artificial intelligence " to a "winner in the field of artificial intelligence ."
Google shares rose more than 5% in pre-market trading on Monday, further widening its year-to-date lead over other tech giants. This was driven by investor confidence in the accelerating progress of its artificial intelligence (AI) business and its cloud computing... Rapidly improving business profitability. Google Cloud, which once dragged down the company's overall profit margin, has now become a core profit driver. one.
It's worth noting that the company's stock price may receive another major boost in the future. Investors are currently focused on the release of Gemini 3.0—the next generation of its large language model. On Monday morning, the prediction platform Polymarket showed a 92% probability that Gemini 3.0 would be released before November 22nd. Last week, this probability was only 69%. Subsequently, Google CEO Sundar Pichai responded to related discussions on the social media platform X with a "thinking emoji," a subtle move widely interpreted as confirmation of the release date.
The market's eager anticipation for the upcoming Gemini 3.0 release reflects Wall Street's renewed recognition of Google's position in the field of artificial intelligence. Earlier this year, investors worried that the rise of ChatGPT would impact traditional search business, but Google has since regained investors' trust thanks to the robust resilience of its search business and the outstanding performance of its proprietary AI models.
Morgan Stanley A report released in late October indicated that Gemini 3.0 is likely to deliver improvements in AI inference, diffusion capabilities, agency commerce, and agency travel, features that are expected to help Alphabet solidify its leading position in the field of generative AI. Mizuho Securities wrote that the release of Gemini 3.0 "is expected to deliver significant upgrades in multimodal capabilities, inference, and automation," and may also feature enhanced "real-time video understanding" capabilities.
On social media, users are anticipating that the new model will bring performance improvements to the Nano Banana image generation tool. "If these features are implemented, Gemini 3.0 is expected to significantly narrow the gap (with competitors) and even take a leading position in the fields of multimodal inference and enterprise automation."
(Article source: CBN)
