Buffett's successor suffers a crushing defeat in first battle, Google stake sees $3 billion floating loss

BlockBeats news, November 6 — After Warren Buffett stepped down as chief executive, 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 a market correction. As Alphabet's stock price pulled back, the unrealized loss on Berkshire Hathaway's holdings is estimated at approximately $3 billion.

Berkshire spent approximately $10 billion to participate in Alphabet's financing in June this year, purchasing shares at about $350 per share. Buffett previously stated that the decision to buy Alphabet shares was made by him. The report, citing foreign media estimates, said that as of the end of June, Berkshire held a total of approximately 106 million Alphabet shares, including both voting and non-voting shares.

Alphabet's stock price has fallen more than 24% cumulatively since June, having dropped below the earlier discounted subscription price. Its third-quarter results fell short of market expectations, and massive AI capital expenditures turned free cash flow negative, further weakening investor confidence. In addition, Berkshire has invested a cumulative $930 million in Italian technology company Bending Spoons; the company's stock price rose briefly after Berkshire's additional investment, then declined for several consecutive weeks.

CFRA Research 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 entered too late. Keefe, Bruyette & Woods analyst Meyer Shields pointed out that Abel may view AI-related investments as a long-term positioning rather than attempting to influence market sentiment through short-term trading, which is not contradictory to Berkshire's traditional value investing philosophy.

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