Alphabet Edges Out Apple as Better Tech Investment for Berkshire Hathaway
Warren Buffett's successor at Berkshire Hathaway (BRKA +0.31%) (BRKB +0.23%) has significant investments in Apple (AAPL -1.44%) and Alphabet (GOOG -1.66%) (GOOGL -1.76%). The two companies are among the conglomerate's largest holdings, with Apple being its biggest holding at $66 billion, and Alphabet making up about $37.8 billion in assets.
The question remains: which stock would Berkshire choose if it had to start from scratch? To answer this, we must consider how much of an AI investor Berkshire wants to be. The technology is rapidly changing the stock market, with Alphabet heavily investing in AI and transforming its Google Search platform to include AI overviews.
Alphabet's investment in AI has reshaped its company, with nearly every new feature being AI-focused. On the other hand, Apple has taken a more measured approach to AI products, but may have missed an opportunity to create an AI subscription service. If AI goes bust soon, Apple might not lose much, while if it takes off, Apple could be left behind.
Buffett is known as a value investor and tends to avoid expensive stocks. However, he has invested in Apple, which may have reached a level where it's priced too highly. From an operating income perspective, Apple is more expensive than Alphabet, making the latter a better bargain.