Image source: The Motley Fool.
Warren Buffett has impressed the financial world with his investment skills for nearly 60 years. As chairman and chief executive officer, he's helped guide Berkshire Hathaway to market-beating gains over that time period -- with a compounded annual increase of almost 20% compared with a 10% such increase for the S&P 500.
So, it's easy to understand why, when Buffett makes a move, investors take note – and sometimes follow along. The billionaire today is close to retirement as he aims to hand over the CEO hat to Greg Abel, currently vice-chairman of non-insurance operations, at the start of 2026. But in his final months on the job, he's made a significant move, scooping up a $3.4 trillion-dollar stock that makes a great buy before any potential market crash. Let's check out Buffett's best move yet.
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The S&P 500's recent performance
First, though, an important note: Though the S&P 500 has pared some of its gains in recent weeks, the index still is heading for a double-digit increase this year. And though investors have worried about slower-than-expected interest rate cuts or the possibility of an artificial intelligence (AI) bubble on the horizon, we haven't seen signs of a market crash ahead.
But, regardless of the current environment, it's always important to prepare your portfolio for a future crash. That's because the market passes through bull and bear cycles, and over time, crashes do occur. I have two pieces of good news for you, though: The S&P 500 always has recovered and gone on to thrive after a crash, and there are ways to reinforce your portfolio to limit potential damage during tough moments.
One way to prepare for such an event is through buying shares of quality companies with established businesses and solid long-term prospects. In the event of a crash, these players may suffer somewhat, but they have what it takes to manage the difficult times and quickly rebound as the environment improves.
Buffett's latest move
Buffett, during the third quarter of this year, added one such player to Berkshire Hathaway's holdings. I'm talking about Alphabet (GOOGL +3.50%) (GOOG +3.26%), owner of the world's top search engine, Google Search, and cloud computing business, Google Cloud.
Alphabet has delivered many years of earnings growth to investors and established itself as a leader in these two business areas.
NASDAQ: GOOGL
Key Data Points
Buffett is known for appreciating companies with solid moats, or competitive advantages, and he's surely recognized Alphabet's. This is in the form of leadership in the search business. Google Search has steadily held about 90% market share worldwide and even entered our vocabulary as we often say we're going to "Google" something.
Importantly, advertising across the Google platform drives Alphabet's revenue, and here's some more good news: Alphabet's push into AI is improving Google Search and the advertising experience, and this should keep advertisers spending here.
The promise of growth
Meanwhile, Alphabet also offers investors the promise of growth through its cloud business. Google Cloud is benefiting from the AI boom as it offers customers access to top AI products and services. In the recent quarter, the cloud business saw revenue jump 34% to more than $15 billion. And since demand is high for AI capacity, something that Google Cloud provides, we could see this growth continue throughout the phases of the AI boom.
Buffett's purchase of Alphabet surprised investors since he isn't one to invest in many tech companies. But this player offers key elements the billionaire likes, such as the moat I mentioned above and well-run businesses that have proven themselves. On top of this, Alphabet might have won over Buffett for its value – the company's valuation is very reasonable, and some might even call it cheap.
During the quarter of Buffett's purchase, it traded from about 17x forward earnings estimates to about 23x estimates. Valuation has since climbed to 27x estimates, but even at this level, the stock remains reasonably priced.
All of this means Buffett's best move -- getting in on Alphabet recently -- is one to follow. This top stock is a secure player to own during tough times, such as during a crash, and during better times, it may help power your portfolio higher.
