Warren Buffett Resigns from Berkshire Hathaway
After leading Berkshire Hathaway for 60 years, Warren Buffett has stepped down. Throughout his tenure, he profoundly shaped the company’s stock portfolio, often making investments with a long-term perspective in mind.
Despite his resignation, investors can reasonably expect his influence on Berkshire to persist for a while. Some of the stocks he favored might see significant gains by 2026, and two of them seem particularly poised to outshine the market.
There’s been a lot of discussion around Alphabet, Google’s parent company. Stock prices were pretty low just this past spring, mainly because their AI products were trailing behind competitors and letting old search engines dominate the market.
However, Alphabet is pulling through after committing approximately $91 to $93 billion in funding. They’ve been heavily investing in AI, and it looks like those investments are starting to bear fruit.
Surprisingly, improvements with Gemini and Waymo have caught the attention of investors. Alphabet reported nearly $74 billion in free cash flow in the third quarter this year, which includes their capital investments. This indicates that the company continues to thrive even after spending substantially in the AI sector.
Last year, Buffett and his team took significant note of this, adding more than 17.8 million shares of Alphabet in the third quarter of 2025. Sure, Berkshire has limited attractive investment options given its $382 billion liquidity, but the $4.3 billion investment represents almost 2% of Berkshire’s total portfolio.
It might still be a good time to dive in. With a P/E ratio of 31x, it’s the second most affordable among the Magnificent Seven stocks based on earnings multiples.
Looking ahead, Alphabet’s stock is likely to rise next year as it continues investing in technology and pushing for innovation. Similar to Alphabet, Amazon is also in a prime position to gain from advancements in AI. As a top player in e-commerce and cloud computing, it’s no shock that Amazon is leading the charge in AI.
In its latest quarter, Amazon reported $120 billion in capital expenditures in the last year. Even after that, it generated $15 billion in free cash flow, which is impressive.
This hefty investment appears to be yielding results, enhancing its cloud business, opening up more sales channels, and refining its digital advertising strategies.
However, it’s worth mentioning that the stock has recently stagnated, as many investors have opted to sell off AI-related stocks in recent weeks. Also, Amazon Web Services is feeling the heat from competition, especially from Google Cloud and Microsoft’s Azure platform.
Back in 2019, Berkshire acquired a majority stake in Amazon and has since sold a small portion in later quarters. The most recent sale occurred in 2023. Currently, Amazon’s stock has become more affordable, despite its historically higher P/E ratio, which now stands at about 32x, not far off from Alphabet’s.
In this context, investors might find a prime opportunity to follow Buffett’s lead with Amazon. Over time, this stock should rebound as the significant investment in AI starts to yield returns.
Before considering Alphabet, it’s crucial to weigh some factors. Analysts from Motley Fool Stock Advisor have identified some of the best stocks for potential impressive returns. Interestingly, Alphabet didn’t make the list.
For example, consider Netflix or Nvidia. Investing a modest amount at their recommendations would have led to staggering returns. The overall average return for Stock Advisor has been 973%, vastly outweighing the S&P 500’s 195% over time.
