Warren Buffett has finally relinquished the CEO post at Berkshire Hathaway (BRK.A 0.46%) (BRK.B 0.34%). Over the course of 60 years, he transformed the failing textile business into a massive conglomerate by investing in a portfolio of outstanding businesses. And he didn't let up on making moves in the portfolio leading up to the CEO transition, with Greg Abel taking over on Jan. 1.
The most recent SEC disclosures from Berkshire Hathaway show Buffett continued to sell off shares of two of the company's biggest marketable equity investments: Apple (AAPL 1.93%) and Bank of America (BAC 2.87%).
With some of that capital, Buffett and his team of investment managers bought another company that's already proven an incredibly well-timed investment. Shares are up 78% in the last six months, and they could continue to climb in 2026. Let's see why.
Image source: The Motley Fool.
Buffett has been selling stocks for 12 straight quarters
Buffett has struggled to find many good investment opportunities in the stock market recently. While stock valuations continue to climb higher, Buffett has sold off pieces of some holdings and found no better option to deploy the cash than short-term Treasury bills.
In fact, he sold more stocks than he bought for 12 straight quarters. As a result, Berkshire Hathaway's net cash and equivalents pile has climbed to a whopping $354 billion as of the end of the third quarter. Two of the biggest stock sales of the last few years are Apple and Bank of America.
Apple has long been Berkshire's largest holding after Buffett piled over $30 billion into the stock between 2016 and 2018. At one point, the stock accounted for half of the conglomerate's marketable equity portfolio. Despite selling nearly three-quarters of the position, Apple's still the biggest stock holding in the portfolio. It accounts for over 20% of the $315 billion in assets.
Buffett thinks Apple is a very strong company with a great brand, top-notch products, and excellent management. However, his actions suggest the stock could be overvalued after the stock's current run. Apple shares currently trade for a forward P/E of about 33, which is higher than many of the biggest companies with significant exposure to the artificial intelligence trend driving financial returns. At the current price, it makes sense to decrease exposure to the stock.
NASDAQ: AAPL
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Bank of America has also seen its share price soar over the last couple of years. The stock now trades at its highest price of the century, surpassing its pre-financial crisis high. It's now valued close to 2 times its tangible book value, the highest valuation it's seen since Buffett's initial investment, except for the recent period of rapidly rising interest rates in 2021. It's a much different story today with rates declining, so the stock looks much more expensive. Buffett has cut 44% of Berkshire's position.
There's another reason besides valuation that Buffett has been selling stocks. He views corporate tax rates as being too low. With the increasing government deficit, he expects Congress to eventually act to raise tax rates, so he's taking profits while the cost of doing so is low. It's important to note that individual investors typically pay capital gains taxes on their investment gains, which historically receive much lower tax rates for investments held for at least one year and a day.
All told, Buffett's sales of Apple, Bank of America, and other stocks in Berkshire's portfolio have raised $224 billion in cash since the fourth quarter of 2022. Meanwhile, the opportunities to deploy that money into new investments have been few and far between. But one stock caught the eye of Buffett and his team recently, and they put roughly $4 billion to work buying shares.
NYSE: BAC
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The most recent addition to Berkshire's equity portfolio
Before Buffett retired he was finally able to pull the trigger on a stock he's had his eye on for a long time: Alphabet (GOOGL 1.66%) (GOOG 1.69%). He told shareholders that the stock was a missed opportunity all the way back in 2018, as he had firsthand experience with the tremendous profitability of its digital advertising business. Berkshire's subsidiary, GEICO, was buying Google Search ads at a premium price, even though the marginal cost for Google was practically nothing.
The digital advertising business is still a huge and growing cash cow for Alphabet. Its revenue run rate is approaching $300 billion, and it's still growing quickly despite the threat of AI chatbots like ChatGPT and Perplexity. Google Search revenue climbed 15% in the third quarter, and it accelerated throughout 2025.
NASDAQ: GOOGL
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As a result, Alphabet is a cash-generating machine. Free cash flow over the last 12 months climbed to $73.6 billion. That's despite heavy investments in artificial intelligence data centers to meet the growing demand for its AI services in Google Cloud. That has been a huge growth driver for the business over the last few years, as developers seek to add compute as quickly as possible for large language model training and inference needs.
Google Cloud revenue climbed 34% and experienced expanding operating margin as it scales. The company's backlog is increasing even faster as demand outpaces supply, up 46% from the prior quarter alone.
Despite the strong growth of its cash cow and the rapid expansion of its operating margin on the smaller, but faster-growing cloud business, shares have traded at a very attractive price. When Buffett and his team made their initial purchase in the third quarter, it was likely done when the stock traded at a forward P/E of around 20.
While the stock has climbed significantly since then, shares still look attractive at a forward multiple of about 28, considering the strength of its balance sheet and strong growth. It wouldn't be a surprise to see that Buffett and his team added more shares to the position before he left his post as CEO at the end of the fourth quarter.
