"Warren Buffett and his Berkshire Hathaway ( NYSE:BRK-B) team recently accounted a major investment of more than $4 billion in Alphabet after seeing what this company can do. And viewing the company's core search business as the cash cow which can fund such innovation, as well as a valuation that's more appealing than most of its mega-cap peers, that could portend well for long-term investors. At least, Berkshire hopes so."
"Any sector that grows to scale via a pricing model in which buyers are relatively price insensitive is one that investors want to hop on. Nvidia's ability to basically charge what it pleases for its high performance chips has led to astronomical profitability, and incredible expectations from investors that this profitability growth can continue for many years to come. The thing is that such highly-profitable opportunities in the market are bound to invite competition."
Alphabet generates strong cash flow from its core search business that can fund investments in AI, cloud expansion, and Waymo autonomous driving. Berkshire Hathaway made an investment exceeding $4 billion, reflecting confidence in the company’s cash-generating operations and long-term innovation potential. The company’s valuation appears more attractive than many mega-cap peers, offering a mix of growth and value for long-term investors. Continued demand for AI and cloud services supports revenue diversification. Competitive dynamics in high-margin chip markets, exemplified by Nvidia, create differing risk and pricing pressures across the technology sector.
Read at 24/7 Wall St.
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