Buffett's Successor Faces Setback, Google Holdings Show $3 Billion Unrealized Loss

On November 6, after Warren Buffett stepped down as CEO, Berkshire Hathaway is attempting to expand its investments in the artificial intelligence (AI) sector. However, the technology investment strategy pushed by new CEO Greg Abel quickly faced the test of market adjustments. As Alphabet's stock price fell, the estimated unrealized loss on Berkshire Hathaway's holdings is approximately $3 billion.

In June, Berkshire invested about $10 billion in Alphabet's financing, purchasing shares at around $350 each. Buffett previously stated that the decision to buy Alphabet stock was made by him. As of the end of June, it is estimated that Berkshire held approximately 106 million shares of Alphabet, including both voting and non-voting shares.

Since June, Alphabet's stock price has dropped over 24%, falling below the previous discounted purchase price. Its third-quarter performance fell short of market expectations, and massive AI capital expenditures turned free cash flow negative, further undermining investor confidence. Additionally, Berkshire has cumulatively invested $930 million in Italian tech company Bending Spoons, whose stock price initially rose after Berkshire's additional investment, but then fell for several consecutive weeks.

Analyst Cathy Seifert believes that Berkshire's increased exposure to tech stocks may be a conscious long-term adjustment, but the market needs to consider whether these investments were made too late. Analyst Meyer Shields pointed out that Abel may view AI-related investments as a long-term strategy rather than attempting to influence market sentiment through short-term trading, which does not contradict Berkshire's traditional value investment philosophy.

In contrast to the pressure on tech holdings, Berkshire's Class A shares rose to a historic high of about $875,000 on Thursday, having increased approximately 16% over the past month. As of the end of the second quarter, the company held about $365.5 billion in cash and related liquid assets, still possessing the ability to expand investments when asset prices decline. Berkshire plans to announce its third-quarter results on November 7, with the market focusing on the performance of its insurance, railroad, and consumer businesses, as well as changes in cash reserves and stock buybacks.

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