Buffett invested in this new Dow component stock last year, and his successor recently increased his position by 200%. Can he still buy it now?
Warren Buffett's stock picking record has been outstanding for more than sixty years. This investment approach has allowed Berkshire Hathaway to outperform the S&P 500 in the long term. Buffett never chases short-term market speculation, but holds high-quality companies for the long term. This long-term investment strategy has achieved remarkable results. Buffett stepped down as CEO at the end of last year, but still serves as Berkshire's chairman and is deeply involved in the company's operations. In his last year in charge of investment decision-making, he made a move that attracted much attention: He rarely bought a company that he had rarely set foot on before - a technology company. In the first quarter of this year, Buffett's successor Greg Abel significantly increased his position in this stock that Buffett had newly discovered last year, directly increasing the size of his position by 200%. This home has just been included Are the technology giants in the Industrial Average still worth buying now? Detailed analysis below. Buffett attended the event Buffett's investment logic To understand this investment, you must first understand Buffett's core philosophy. Buffett insists on long-term investment and only invests in high-quality leaders; he will not chase short-term hot stocks with mediocre qualifications to quickly move in and out to earn short-term profits. The billionaire prefers companies with deep moats (unique barriers to competition) and only invests in companies with reasonable valuations. The above logic is exactly why Buffett bought Alphabet Company ( : GOOG/GOOGL) root cause. Ordinary people come into contact with this company every day: search engine. Over the years, Google search has firmly occupied more than 90% of the global search market share, and "Google it" has even become a common daily expression. Two good opportunities for low-price deployment Alphabet has repeatedly given long-term investors like Buffett buying windows over the past year. Buffett first established a position in the third quarter of last year, when the stock's forward price-to-earnings ratio was less than 20 times. Combined with the company's steady growth all year round and its position as the absolute leader in the industry, this valuation is extremely cost-effective. Abel increased his investment again in the first quarter of this year and opened a new position in Class C Google stocks, increasing his total position by about 200%. Although the valuation when adding the position was higher than the price at which Buffett first purchased it, it was still in the undervalued range. The stock's forward price-to-earnings ratio has now risen to 24 times, and its valuation has increased, but overall it is still reasonable. AI drives a new round of growth Google’s search fundamentals are solid, and the addition of Google Cloud and artificial intelligence businesses has opened up new growth space for the company. Google Cloud has opened a full set of AI products to enterprises, and its self-developed large model Gemini is fully commercially available. At the same time, Gemini has been deeply implemented in Google's own business, and the search section has been fully equipped with AI capabilities. Buffett and Abel are optimistic about Alphabet. The core lies in its indestructible industry barriers, and they have seized low-price deployment opportunities twice. For ordinary investors, the current company valuation is still reasonable, the long-term growth logic of AI is clear, and it is not too late to enter the market now.