Berkshire Hathaway's Favorite Artificial Intelligence (AI) Stock Looks Like a Genius Buy Now

Berkshire Hathaway's Favorite Artificial Intelligence (AI) Stock Looks Like a Genius Buy Now

Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) and artificial intelligence (AI) may not seem like an investment duo that would naturally go hand in hand. The conglomerate has long focused on more traditional, less technological businesses. Still, given how much focus there has been on AI among nearly every company in recent years, this association was unavoidable. The question is no longer if you're an AI investor, but what kind of AI investor you are.

So while Berkshire Hathaway may not be rushing headlong to play the AI megatrend, it clearly believes in what Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is doing, because it has massively increased its stake in one of the most AI-first companies on the market. Based on the stock's valuation, I think it would be a good idea for investors to follow suit and scoop up shares now.

Missed AI's "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »

Alphabet is now Berkshire's third-largest position

The most recent information we have regarding Berkshire Hathaway's investment activities is its latest 13F filing, which details its portfolio holdings as of June 30. That data is a bit outdated, but the conglomerate has historically been a long-term investor, so when it makes a purchase, it's usually setting up for a multiyear holding period.

Furthermore, the price tag you can buy Alphabet stock at now is lower than it was during two-thirds of Q2, as the stock rose above $340 per share after the company reported its Q1 results in late April, and stayed above that mark through the end of the quarter. So now may not be the worst time to invest in Alphabet, compared with Berkshire's previous buys.

During Q2, Berkshire bought more than 48 million shares across Alphabet's two share classes, and the combined position now makes up about 12.6% of its equity portfolio. It's Berkshire's third-largest stock position, denoting extreme confidence in the tech giant.

While legendary Warren Buffett is no longer in the corner suite, he initiated its first Alphabet buy before his tenure as Berkshire Hathaway's CEO ended. This week, he announced he was also stepping down as its chairman, and shifting to the role of chairman emeritus. However, current management is continuing his legacy, and its recent moves show great confidence in Alphabet. And it's easy to understand why.