Warren Buffett Successor Greg Abel Pours $10 Billion More Into His Largest Bet Yet
Written by Adam Levy for The Motley Fool -> Abel spent roughly $11 billion buying this stock on the open market in the first quarter. The company approached him with an offer to buy $10 billion more recently. The capital will be used to fund its growth initiatives. In Greg Ab
Abel spent roughly $11 billion buying this stock on the open market in the first quarter.
The company approached him with an offer to buy $10 billion more recently.
In Greg Abel's first letter to Berkshire Hathaway shareholders as CEO, he promised to preserve the culture at Berkshire Hathaway established by Warren Buffett . He emphasized financial strength and capital discipline as defining factors of Berkshire and its portfolio. But that hasn't stopped Abel from steering the company toward new investments.
Abel's largest investment so far has been his purchase of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) shares on the open market during the first quarter. He spent an estimated $11 billion buying shares, and he recently added another $10 billion to that investment. While Buffett long eschewed tech stocks like Alphabet, Abel is quickly making it a core holding for Berkshire's portfolio.
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Abel's $10 billion investment in Alphabet is part of a larger $85 billion equity raise from the tech company. Abel was able to negotiate a discount on the shares in excess of the dilution the company faced from the equity offering. With the latest purchase, Alphabet is set to become Berkshire's fourth-largest position, according to publicly available information.
Alphabet plans to use the capital raised to fund additional artificial intelligence (AI) infrastructure and help employees pay taxes on stock-based compensation. Both seem like good uses of cash right now, as compute capacity and exceptional engineering talent are key growth drivers for Alphabet's business.
Google Cloud, Alphabet's cloud computing platform, is seeing accelerating revenue growth as more capacity comes online each quarter. Management shared plans to spend between $180 billion and $190 billion this year, with a significant increase in spending in 2027. That should fuel continued growth in Google Cloud revenue, which climbed 63% last quarter with operating margin expanding to 32.9% from 17.8% a year ago.
