Conglomerate ends 14-quarter streak of net stock sales as Greg Abel accelerates buybacks and deploys billions under Berkshire’s new leadership

Berkshire Hathaway began putting its enormous cash reserves to work in the second quarter, investing nearly $20 billion more in stocks than it sold and repurchasing billions of dollars of its own shares as new Chief Executive Greg Abel moves to reshape the conglomerate’s capital-allocation strategy.

The Omaha, Nebraska-based company said Saturday that it repurchased $4.5 billion of its own shares during the second quarter and another $3.3 billion in July. The purchases mark an acceleration from the buybacks that resumed in March after a nearly two-year pause.

Berkshire also bought nearly $20 billion more stocks than it sold between April and June, ending a 14-quarter streak in which the conglomerate had been a net seller of equities.

The shift is significant because Berkshire had accumulated one of the world’s largest corporate cash piles as Warren Buffett struggled to find investments large enough to absorb the company’s growing liquidity.

Berkshire’s cash, cash equivalents and short-term Treasury bills stood at $364.7 billion at the end of June, down from a record $380.2 billion three months earlier. Even after the latest spending, the conglomerate retains an enormous financial cushion.

The biggest new equity bet was Alphabet, parent of Google and YouTube. Berkshire invested about $10 billion in the company during the quarter, making Alphabet one of its largest stock holdings. The purchase gives Berkshire substantial exposure to artificial intelligence and digital advertising while adding a major technology company to a portfolio historically dominated by financial, consumer and industrial businesses.

The move also signals that Berkshire is willing to deploy a meaningful portion of its cash when management sees attractive valuations, rather than allowing liquidity to accumulate indefinitely.

Abel Begins to Put His Stamp on Berkshire

The second-quarter results provide one of the clearest early indications of how Abel intends to manage Berkshire’s vast balance sheet after succeeding Buffett as chief executive.

Abel became CEO early this year, while Buffett remains chairman. Investors have been closely watching whether Abel will adopt a more aggressive approach to acquisitions, equities and share repurchases than Buffett did during the final years of his tenure.

The pace of Berkshire’s buybacks is already comparable with some of Buffett’s most active periods. Berkshire’s biggest annual share-repurchase programme came in 2021, when it bought back $27 billion of its own stock.

The latest purchases suggest that Berkshire’s capital allocation may be entering a more active phase. The company has the financial capacity to pursue large acquisitions, invest in public companies and repurchase shares simultaneously, although Abel’s willingness to deploy capital will ultimately depend on valuations and available opportunities.

The Alphabet investment is notable because it represents a large commitment to a company at the center of the AI investment cycle. Berkshire had previously been cautious about technology valuations even as AI enthusiasm drove major U.S. technology stocks sharply higher.

Operating Businesses Deliver Stronger Profit

Berkshire’s operating performance also improved during the quarter. Second-quarter operating profit rose 16% to $12.98 billion, or about $9,068 per Class A share, from $11.16 billion a year earlier.

Higher earnings at BNSF railroad and stronger results from Berkshire’s manufacturing, service and retail operations contributed to the increase. Foreign-currency movements also provided a benefit.

Net income more than doubled to $25.67 billion, or about $17,928 per Class A share, from $12.37 billion a year earlier.

The comparison was helped by a $3.76 billion writedown Berkshire recorded a year earlier on its stake in packaged-food company Kraft Heinz. That accounting charge had weighed heavily on the prior year’s net income.

The operating-profit figure is generally more closely watched as a measure of Berkshire’s underlying business performance because net income can fluctuate significantly with changes in the market value of its equity investments.

Cash Mountain Begins to Shrink

The reduction in Berkshire’s cash pile is modest relative to its overall size, but the direction is important.

The company entered the quarter with more than $380 billion in cash and Treasury bills, reflecting years of accumulated liquidity. Buffett repeatedly argued that Berkshire needed to maintain substantial financial strength while waiting for opportunities that offered attractive risk-adjusted returns.

Now, with Abel at the helm, Berkshire appears to be moving toward greater capital deployment.

The nearly $20 billion net stock purchases, combined with $4.5 billion in second-quarter buybacks and more than $3.3 billion in July repurchases, show that the company is no longer simply allowing its cash reserves to accumulate.

The shift could become more consequential if Berkshire finds additional companies trading at prices that meet its investment criteria.

At the same time, Berkshire’s cash balance remains large enough to preserve its ability to make a transformative acquisition or provide liquidity during a market downturn. That combination of a huge cash reserve and renewed willingness to invest gives Abel considerable flexibility as he establishes his own record as Berkshire’s capital allocator.

Berkshire’s roughly $10 billion investment in Alphabet may be the most closely watched element of the quarter.

Alphabet has become one of the largest beneficiaries of the global AI investment cycle, but it also faces substantial costs as it expands data-center capacity and develops AI models and services.

For Berkshire, the investment provides exposure to a business with several established revenue streams, including search, advertising, cloud computing and YouTube, while giving the conglomerate a larger position in the technology sector.

The move also indicates that the AI boom is reshaping the opportunity set for large institutional investors. Berkshire can participate in the theme without taking on the early-stage risks associated with unprofitable AI startups or infrastructure companies. Its decision to deploy $10 billion into Alphabet suggests management sees sufficient long-term value in the company’s earnings and competitive position to justify a significant allocation.

The broader message from Berkshire’s results is therefore less about a single stock purchase than about a change in the use of its balance sheet.

Switch Inc., a data center operator majority-owned by DigitalBridge Group Inc., has confidentially filed for a U.S. initial public offering as investors continue to pour capital into infrastructure supporting the artificial intelligence boom, according to Bloomberg News, citing people familiar with the matter.

The Las Vegas-based company is targeting a public listing that could come as early as November, the people said. The IPO plans remain preliminary, and the timing, size and other terms of the offering could change.

Switch is working with Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley on the potential offering, one of the people said.

The planned IPO would position Switch among a growing group of data center companies seeking access to public equity markets as surging demand for AI computing drives investment in power, servers and large-scale data center capacity.

The company operates facilities in Nevada, Michigan, Georgia and Texas, according to its website. Its infrastructure is designed to serve large technology customers whose computing requirements have expanded rapidly with the development of generative AI and other data-intensive applications.

A16z Co-Founder Joins Switch Board

Separately, Ben Horowitz, co-founder of venture capital firm Andreessen Horowitz, is joining Switch’s board, according to people familiar with the matter.

Switch has also been working on a funding round led by Andreessen Horowitz, which could value the company at close to $50 billion including debt, Bloomberg News reported in July.

That potential valuation would represent a major increase from the $11 billion enterprise value at which Switch was acquired in 2022 by a group including DigitalBridge and Australian infrastructure investor IFM Investors. The valuation would also highlight how dramatically investor expectations for data center infrastructure have changed as AI companies and cloud providers commit enormous amounts of capital to expand computing capacity.

Data Center IPO Market Gains Momentum

Switch’s confidential filing comes during an increasingly active period for U.S. data center listings and fundraising.

Data center owners, infrastructure investors and companies supplying equipment and services to the industry have been seeking new capital as AI-related demand accelerates the need for additional computing facilities.

Blackstone Digital Infrastructure Trust raised $2 billion through an IPO in May, while Csquare, backed by Brookfield, raised $1.21 billion in an IPO last month.

The activity reflects a broader shift in how investors view data centers. Once primarily considered a specialized real estate and infrastructure business, the sector has increasingly become a key part of the AI investment chain.

The rapid expansion of AI workloads has created demand for facilities with access to large amounts of electricity, advanced cooling systems and high-density computing infrastructure. That has increased the strategic value of data center operators capable of securing power and bringing new capacity online.

For Switch, an IPO could provide capital to expand its footprint while giving existing shareholders a liquid market for their stakes.

DigitalBridge is Switch’s majority owner and has positioned itself as a major investor in digital infrastructure, including data centers.

DigitalBridge and IFM Investors acquired Switch in 2022 in a transaction valued at about $11 billion including debt. DigitalBridge itself agreed last year to be acquired by SoftBank Group, further connecting Switch to one of the world’s largest technology-focused investment groups.

The potential IPO therefore comes at an important point for Switch’s ownership structure and financing strategy.

A public listing would also give investors a clearer market valuation for a company whose assets have benefited from the sharp repricing of data center infrastructure since the AI boom accelerated.

The biggest question for prospective investors will be whether Switch can convert the extraordinary demand for AI infrastructure into sustainable long-term returns. Building data centers requires substantial upfront capital, while securing electricity, land and grid connections can constrain how quickly operators add capacity.

If Switch proceeds with a November listing, analysts expect its valuation and market reception could provide another important test of investor appetite for AI infrastructure after a period in which capital has increasingly flowed toward the physical assets required to power the technology.