Greg Abel took over as Berkshire Hathaway (BRKA -0.06%)(BRKB +0.46%) CEO this year, and over the past 12 months, there have been many notable changes to the company’s holdings. Macy’s, Delta Air Lines, and even tech giant Alphabet are new holdings. While Warren Buffett remains a big part of the business and says he initiated the move to buy Alphabet, there may still be more changes to come in Berkshire’s portfolio under Abel.
With Buffett no longer CEO, it also opens the possibility for another tech-focused deal for Berkshire to pursue: buying Microsoft (MSFT +1.95%) shares. Here’s why I think it will happen before the end of the year.
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Microsoft has excellent fundamentals
Companies, schools, and a wide range of organizations around the world rely on Microsoft’s software each and every day. Its Windows operating system and Office products are staples in many businesses. The company has been leveraging artificial intelligence (AI) to enhance them and unlock even more value (i.e., upselling opportunities) for the business.
Microsoft has the same type of market dominance and moat as both Alphabet and another top Berkshire stock, Apple. And the main reason Buffett didn’t invest in Microsoft in the past was simply due to his close relationship with co-founder Bill Gates, to avoid even the appearance of access to inside information or a potential conflict of interest. Now, with Gates and Buffett no longer CEOs of their respective companies, it paves the way for Abel to make a move and add the top tech stock to Berkshire’s portfolio.
The timing may also be ideal to do so, as Microsoft’s stock has been falling heavily in value this year, down around 19% thus far. Trading at 20 times its estimated future earnings (based on analyst estimates), it’s also a far cheaper buy than Alphabet, which trades at 23 times its projected future profits.
Today’s Change
(1.95%) $7.45
Current Price
$389.15
Key Data Points
Market Cap
Day’s Range
$388.00 – $394.20
52wk Range
$349.20 – $555.45
Volume
10.3K
Avg Vol
39.1M
Gross Margin
68.31%
Dividend Yield
0.91%
The stock is a fantastic buy at a great price
Although Microsoft isn’t trading at a 52-week low anymore, it’s still around the levels it was at back in early 2024. With greater earnings power now due to AI and more growth opportunities ahead, it may not drop a whole lot lower in value. And Berkshire, which recognized the value in Alphabet, may also see an intriguing opportunity to buy Microsoft’s stock right now.
For all types of investors, including Berkshire and both value and growth-oriented investors, buying shares of the tech giant while they’re at reduced levels could be a fantastic move and yield great returns later on.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Berkshire Hathaway, and Microsoft. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.
