Small Colorado Company (Backed by Sam Altman) Could Save U.S. Power Grid (From Altimetry)

One of the most closely watched investment firms in the world, Berkshire Hathaway, is back in the news, releasing its latest round of portfolio updates.

The company’s legendary longtime leader, Warren Buffett, stepped down as CEO at the end of 2025, with Greg Abel taking over on Jan. 1, 2026. Buffett remains Berkshire’s chairman, making this the second quarterly portfolio update since the leadership transition.

Berkshire turned over its portfolio significantly in Q1, drastically reducing its number of holdings and selling out of many names.

While the changes in Q2 are not nearly as dramatic, Berkshire is clearly indicating where it sees opportunities in the market.

Berkshire Doubles Down on Alphabet

Berkshire’s most notable move in Q2 did not involve initiating a new position or exiting a holding but rather adding greatly to one of its biggest bets. In Q2, Berkshire massively increased its position in the Magnificent Seven giant and AI hyperscaler Alphabet (NASDAQ: GOOGL).

Combining Alphabet’s Class A and Class C shares, Berkshire now owns approximately 106 million shares of the company. This compares to its position of just under 58 million shares in Q1, marking an 83% increase in just one quarter. As of the end of Q2, Berkshire’s position in Alphabet was worth a whopping $37.8 billion. This accounts for 12.6% of Berkshire’s portfolio, making the name its third-largest holding. This is a significant elevation versus Q1, when Alphabet was Berkshire's seventh-largest holding.

Clearly, Berkshire has developed significant conviction in Alphabet, which remains the only major AI hyperscaler represented in its reported equity portfolio. There is certainly reason for optimism around Alphabet in the AI race. The most impressive aspect of the company is the soaring growth at Google Cloud.

Last quarter, cloud revenue increased 82% year-over-year (YOY), driven by strong demand for AI infrastructure and AI solutions. This figure surpassed the growth of Microsoft’s (NASDAQ: MSFT) Azure cloud and Amazon.com’s (NASDAQ: AMZN) AWS by a wide margin. These businesses grew by 43% YOY and 36.7% YOY, respectively.

While this is a strong positive indicator for Alphabet’s AI future, not everything at the firm is going well. There is a general belief that the company’s Gemini model is falling behind ChatGPT and Claude. Notably, Alphabet has delayed the release of Gemini 3.5 Pro due to poor performance, heightening concerns.

Berkshire Adds to Homebuilders, Cuts Key Names Across Finance, Steel and Staples

Berkshire also made a clear move as it related to another key part of the stock market in Q2: homebuilders. Berkshire significantly increased its position in Lennar (NYSE: LEN), one of the country’s top homebuilders. Overall, the company increased its position in Lennar by just under 30% to 13.4 million shares when combining both of Lennar’s share classes. This brings the size of its position to approximately $1.2 billion. Homebuilding giant D.R. Horton (NYSE: DHI) was also Berkshire’s only new holding during Q2, although the position is extremely small at just $580,000. The company also has a $75.7 million position in homebuilder NVR (NYSE: NVR), although the position was unchanged during the quarter. These moves are interesting, considering that homebuilders have struggled significantly for some time. Notably, all three of these names are in the red over the past 52 weeks, with Lennar down more than 30%.

Lennar’s revenue growth has been negative for five quarters in a row, although its 5.2% revenue decline in Q2 was a significant improvement versus the 13.3% decline in Q1. Additionally, the company’s orders came in near the high end of its guidance, a positive forward-looking indicator. It is possible that Berkshire believes Lennar is beginning to bottom out, with some financial metrics improving. However, it is important to note that Berkshire is not making a bet on this name that could substantially hurt its overall portfolio performance. Its Lennar position represents only around 0.4% of the company’s portfolio.

On the other hand, Berkshire has abandoned ship when it comes to Mexican beer giant Constellation Brands (NYSE: STZ). The firm sold out of this position in Q2 after reducing its shares held by 95% in Q1. Constellation has failed to stage much of a recovery from its 2026 lows, with beer sales coming under significant pressure.

Berkshire also made large cuts to its positions in big names like Capital One Financial (NYSE: COF), Nucor (NYSE: NUE), and Kroger (NYSE: KR). Its holdings in these names fell by 58%, 52%, and 22%, respectively.

Berkshire’s Hyperscaler Bet Still Has Much to Prove

Alphabet continues to be the biggest story when it comes to Berkshire’s recent portfolio moves, with its other top holdings being long-held positions. Looking ahead, the growth in Google Cloud will be the biggest factor to watch, as this is where much of the company’s AI-related revenue comes from.

Cloud revenue was $24.8 billion last quarter, or just under a $100 billion run rate, which includes a significant amount of non-AI revenue. Yet, the company expects to spend $200 billion on capital expenditures (CapEx) in 2026 at the midpoint. Thus, while Cloud is growing briskly, Alphabet still has a long way to go to justify its AI spending, with the company eventually needing AI revenue to surpass CapEx.

Read this article online ›