With Warren Buffett gone for not even a year, Berkshire Hathaway is already facing questions over its investment decisions. Under new CEO Greg Abel, the conglomerate has made a multibillion-dollar push into artificial intelligence, only to see some of its biggest bets stumble as enthusiasm for the technology fades, according to Bloomberg.
In his first year at the helm, Abel has committed $10 billion to Google parent Alphabet and another $930 million to Italian technology group Bending Spoons, marking a shift from Buffett’s traditionally cautious approach to technology investments.
But the timing has raised concerns. Alphabet shares have fallen more than 24% since June, slipping below Berkshire’s purchase price, while Bending Spoons has also retreated following an initial rally.
CEO Greg Abel
Still, analysts say Abel may be taking a longer-term view, much like Buffett did with his highly profitable Apple investment in 2016. With $365.5 billion in cash at the end of the second quarter, Berkshire has plenty of room to capitalize on lower valuations and expand its AI exposure.
Meanwhile, Berkshire’s upcoming third-quarter earnings will offer a broader look at the conglomerate’s performance under Abel. Solid US economic growth could support its businesses, although inflation and high fuel prices may weigh on retail operations.
Investors will also be watching Geico, where higher claims costs and advertising spending hurt recent profits, and railroad operator BNSF, which could benefit from stronger freight volumes and fuel surcharges.
Bloomberg notes that another focus will be share buybacks. Berkshire resumed repurchases earlier this year after a lengthy pause, but its stock has since climbed to record highs, potentially discouraging further purchases.
The results will offer an early test of Abel’s leadership as he seeks to put Berkshire’s enormous cash reserves to work while preserving the investment discipline that defined the Buffett era. He will have to do so in an era where Democrats now control a large majority of AI/data center planned capacity in the US…
Recall, under Buffett, Berkshire spent years building one of the largest cash piles in corporate America, more than doubling its reserves from roughly $150 billion at the end of 2021 to over $370 billion by late 2025.Â
Buffett largely resisted chasing soaring stock valuations, preferring to sit on the sidelines rather than overpay for investments. Now, less than a year after his departure, Abel is putting billions of those reserves to work in AI, with early results proving less than encouraging.
