This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
At the end of the year, Warren Buffett is due to step down as Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) CEO. Buffett has led this business for 60 years and has grown the small textile firm (its original business) into an investment giant. However, he's been a bit cautious lately and has grown his cash and short-term investments stockpile to $334 billion. That's a huge chunk of cash, making up about a third of its market capitalization.
Before Buffett goes out, he may look to make one more splashy investment, and it would need to be a big one because Berkshire's cash pile is so large that there are very few companies in which it can purchase stakes without actually buying the whole company. So, he might possibly turn to one of the "Magnificent Seven" members to deploy his cash. These include:
- Microsoft (NASDAQ: MSFT)
- Nvidia (NASDAQ: NVDA)
- Apple (NASDAQ: AAPL)
- Amazon (NASDAQ: AMZN)
- Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)
- Meta Platforms (NASDAQ: META)
- Tesla (NASDAQ: TSLA)
These are some of the world's biggest tech companies, and Buffett could, with his cash hoard, take a sizable position in any of them. But will he do it? And which one might make most sense?
Buffett usually likes to invest in cheaper stocks
Apple was one of Buffett's defining investments, and he even stated that "[Apple CEO] Tim Cook has made Berkshire a lot more money than I've ever made Berkshire Hathaway." Over the past few years, Berkshire has heavily trimmed its Apple position, so I doubt he'd buy back more shares, especially at today's valuation.
Buffett is a value investor at his core, and he doesn't often buy shares of expensive companies. That pretty much rules out every member of the "Magnificent Seven" except for one: Alphabet. Its stock is cheap at 18 times earnings, and trades for levels seldom reached.
GOOGL PE Ratio data by YCharts
Would Alphabet be a stock that Berkshire would seriously consider buying? Berkshire historically invests in companies with strong brands; Alphabet checks that box as it owns two of the biggest platforms in their respective areas: Google and YouTube.
With this in mind, Alphabet could be on his radar as a last investment opportunity before he exits the company. But he apparently sees one issue with the business.
Buffett has some concerns with the "Magnificent Seven" capital plans
During the 2025 Berkshire annual meeting, Buffett was asked about how many of the Magnificent Seven members have announced massive capital investments to build out their AI footprint. He responded, "It's always better to make a lot of money without putting up anything than it is to make a lot of money by putting up a lot of money."
Essentially, he says he'd rather invest in a business that can retain its earnings than spend them. He noted that for many years, Apple didn't need to spend money to sell its products, just typical expenses needed to expand production to meet demand. Alphabet has to spend a ton of money on its data center buildout to stay competitive in the AI race and attempt to get ahead.
These investments may or may not work out, and Buffett likely doesn't want to be involved in a business that can't guarantee him a win. As a result, I doubt that Buffett takes a position in Alphabet stock.
However, I still think there's a compelling investment case regarding Alphabet and its cheap stock price. Alphabet still has a strong brand, and although it's spending a lot of capital on data center buildouts, I believe that this will be money well spent in the end, as it will allow Alphabet to retain its place in the market as search transitions to AI-powered search.
I'd be surprised if Buffett takes a position in Alphabet on his way out, but if he does, I think it's a smart move.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
