Moody's Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody's Analytics and Moody's Investors Services. The Moody's Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets. It also offers credit research, credit models and analytics, economics data and models, and structured finance solutions; data sets on companies and securities; and SaaS solutions supporting banking, insurance, and know your customer workflows. The Moody's Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as structured finance securities. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody's Corporation in September 2000. Moody's Corporation was founded in 1900 and is headquartered in New York, New York.

Moody’s looks like a very high-quality business, but the market is already pricing in an almost perfect scenario. The company’s profitability is outstanding: ROE is 76.4%, ROA is 19.2%, ROI is 28.8%, and both net and operating margins remain high and have generally improved over the years. Revenue, operating income, EBITDA, and net income are all at strong levels, confirming the resilience of the business model and its ability to generate cash flow. At the same time, the momentum does not look explosive: the indicators are growing, but rather moderately than accelerating, so there is little basis for a meaningful upward revaluation. The main limiting factor is the very high valuation multiples: P/E is close to 30, P/S is several times above the industry median, and P/B and P/FCF are also noticeably elevated relative to the sector. This means the current share price already reflects the business’s high quality, and further significant upside would require either faster growth or an even stronger improvement in margins. The debt burden remains noticeable: debt/equity is 1.86, and long-term debt exceeds $6.3 billion, while equity has declined compared with previous periods. Liquidity looks acceptable based on the current ratio, but the quick ratio is zero, which for an investor is a signal of weak immediate liquidity and the specifics of the working capital structure. The dividend yield is practically absent, so the investment case is based not on income but on quality and earnings growth. Compared with the industry, the company is stronger than the median across almost all operating metrics, but that is precisely what explains the premium valuation. Given the very expensive multiples, moderate growth dynamics, and debt profile, it is reasonable to remain cautious in the assessment. In the end, Moody’s fundamentals are strong, but the current market price appears to be running ahead of fundamental improvements, so the target should be adjusted moderately lower.

Moody's Corporation

Сильный индекс, значительно упал. Оптимистичный взгляд на свои позиции резко сменился на неуверенность.

Strong index, significantly down. An optimistic view of his position suddenly changed to uncertainty.

Сильный индекс, без изменений. Медведи в растерянности.

Strong index, flat. The bears are confused.

Сильный индекс, значительно упал. Рынок не поддерживает быков.

Strong index, significantly down. The market does not support the bulls.

Сильный индекс, незначительно вырос. Рынок на стороне медведей.

Strong index, slightly up. The market is on the bears' side.

Средний индекс, незначительно вырос. Отток средств из лонгов снизился, но остается значительным.

Medium index, slightly up. The outflow of funds from longs has decreased, but remains significant.

Средний индекс, незначительно упал. Приток средств в шорты снизился, но остается положительным.

Medium index, slightly down. The inflow of funds into shorts has decreased, but remains positive.

Moody’s demonstrates strong profitability and earnings growth, but trades at a very high premium to the sector, while its dividend and liquidity do not support further upside.

Key Points
American Express targets businesses and affluent consumers who are willing to pay for premium benefits.
One of Moody's biggest advantages is that the credit ratings business has relatively few major competitors.
Warren Buffett will go down in history as one of the best investors of our time. Over a 60-year career leading Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB), Buffett time and again outperformed the stock market, and his investment philosophies have been closely watched and emulated for generations.
But the company under Buffett, and his successor, Greg Abel, isn't afraid to make big moves. Berkshire closed several positions in its portfolio this year, including selling its entire stake in credit card giants Visa and Mastercard. But it's not completely out of the credit business. It still has significant stakes in two companies that operate under different umbrellas in the credit space -- American Express (NYSE: AXP) and Moody's (NYSE: MCO).
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Berkshire Hathaway holds 22% and 14% stakes in these two credit stocks. And both are prototypical Berkshire holdings in the style of Buffett -- with reliable earnings, competitive advantages, and businesses that can grow over decades. Let's take a closer look at them both.
American Express
American Express is a core Berkshire Hathaway holding. Buffett first bought shares in 1964 after a financial scandal sent the company's stock plunging, recognizing that its brand and customer relationships were worth far more than the market was valuing.
That investment worked out pretty well. Today, American Express is one of Berkshire's largest stock holdings, with a stake valued at more than $47 billion. And I think there's a good reason Buffett has remained so loyal to the company.
Unlike Visa and Mastercard, which primarily operate payment networks, American Express also issues cards and lends money directly to customers. That allows it to collect interest on outstanding balances, in addition to fees from merchants and cardholders, and provides another revenue stream to help beef up American Express' coffers.
American Express also targets businesses and affluent consumers who are willing to pay for premium benefits. Its revamped Platinum Card carries an annual membership fee of $895 -- a hefty price, but one that customers continue to accept in exchange for travel benefits and other rewards.
In the second quarter of 2026, American Express reported revenue of $19.6 billion, up 10% from a year ago. Card member spending increased 9%, while earnings per share climbed 11% to $4.53.
The company also raised its full-year revenue growth outlook to 10%.
I particularly like American Express's success in attracting younger customers. Millennials and Generation Z represent an opportunity to build relationships that could generate spending and membership fees for decades. Its premium customer base, recognizable brand, and multiple revenue streams make American Express an attractive long-term investment.
Moody's
Moody's isn't nearly as familiar to everyday investors as American Express, but it's a great company in its own right.
Moody's provides data, intelligence, and analytical tools, but it's best known for its credit ratings, which offer insights into the creditworthiness of companies, governments, and debt securities. Those ratings matter. A downgrade can make borrowing more expensive, while a strong rating can help companies raise money at more favorable interest rates.
One of Moody's biggest advantages is that the credit ratings business has relatively few major competitors. Moody's and S&P Global dominate the market, and it's not easy for a new company to break in. Investors and financial institutions rely on established ratings agencies to evaluate debt, giving Moody's a competitive advantage that's difficult to duplicate.
Moody's reported second-quarter 2026 revenue of $2.2 billion, an increase of 15% from a year ago. The results reflected growth in its ratings and analytics operations.
Berkshire continues to hold approximately 24.7 million shares, a stake representing nearly 14% of the company.
Two Buffett favorites worth keeping
There's a reason Buffett spent decades emphasizing companies with strong competitive advantages rather than chasing whatever stocks happened to be popular.
American Express has built a premium payments and lending business with customers who are willing to pay for its services. Moody's has established a valuable position in credit ratings and financial intelligence that's difficult for competitors to duplicate.
Both companies have demonstrated their ability to generate profits while protecting valuable positions in their respective markets. That's exactly the kind of business that long-term investors should consider for the long haul.
Missed AI’s "Act 1"? Act 2 Could Be 14x 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, a massive technology build-out that Google’s CEO says could be more profound than fire or electricity.
While everyone watches the chip designers, one "backbone" company provides the critical technology that Nvidia and AMD literally cannot function without. We’ve detailed this under-the-radar player in our new AI Playbook.
American Express is an advertising partner of Motley Fool Money. Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express, Berkshire Hathaway, Mastercard, Moody's, S&P Global, and Visa. The Motley Fool has a disclosure policy.

2 Financial Stocks to Buy That Berkshire Hathaway Kept While Selling Visa and Mastercard

Key Points
Realty Income stock has undergone a considerable sell-off in the last month.
Realty Income’s operations and balance sheet are sensitive to interest rates.
High-yield real estate investment trusts (REITs) aren’t as appealing when 10-year Treasury rates are elevated.
10-year Treasury rates are at 5.28% at the time of this writing -- the highest level since 2002. In September, the Federal Reserve increased rates for the first time since 2023. And investors are concerned that further interest rate hikes could be on the horizon to curb inflation.
Meanwhile, Realty Income (NYSE: O) is down 11.6% over the last month, pushing its dividend yield to 6% -- its highest level in nearly three years. Here's what's driving the sell-off in Realty Income and other real estate investment trusts (REITs) and why Realty Income stands out as a top dividend stock to buy 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 »
Realty Income has a 98.8% occupancy rate
Realty Income operates a portfolio of over 15,500 commercial properties under long-term lease agreements in North America and Europe. It has a 98.8% occupancy rate, meaning existing tenants and properties are relatively insulated from rising rates.
Realty Income's bread and butter is single-unit commercial properties -- especially in the retail industry, which makes up 78.3% of annualized contractual rent. Grocery stores, convenience stores, dollar stores, and drugstores make up a combined 30.6% of annualized contractual rent.
Realty Income partners with customers across multiple properties. Dollar General is the largest client, followed by 7-Eleven, Walgreens, Family Dollar, and Life Time Group (formerly known as Life Time Fitness). But no individual client accounts for more than 3.3% of annual contractual rent.
Rising rates increase borrowing costs, making new deals less attractive as the spread between interest rates and property yields narrows. Higher rates also make it more expensive to refinance older debt -- especially because much of that debt was taken on at rates far lower than today.
Realty Income is down 11.6% in 1 month
Realty Income isn't the only REIT under pressure. Many of its peers have also sold off in lockstep with rapidly rising interest rates.
Unlike companies that use excess free cash flow to pay down debt, Realty Income tends to gradually grow its book of business while keeping debt on the balance sheet. The strategy works as its property count and contractual rent grow, but it does make Realty Income more sensitive to rising rates.
Given its heightened exposure to commercial real estate, it makes sense that Realty Income is undergoing a steeper sell-off than REITs with a balanced exposure to industrial and residential customers.
136 dividend increases since 1994
Historically, Realty Income sells off when rates are higher because it's a more challenging operating environment for its business model and because higher Treasury rates are an opportunity cost for dividend stocks. 10-year Treasury notes are typically viewed as risk-free because they are backed by the U.S. government. So 10-year rates at 5.3% compared to Realty Income's 6% yield is a very different setup than if Realty Income were yielding, say, double the risk-free rate.
However, Treasury notes offer a fixed return, whereas the real estate dividend stock offers yield and share price appreciation. It also tends to gradually increase its adjusted funds from operations (AFFO) over time. AFFO measures recurring cash flow that supports dividend payments.
On Sept. 8, Realty Income announced its 136th common stock monthly dividend increase since it was listed on the New York Stock Exchange in 1994. Realty Income pays a monthly dividend, providing a higher-frequency passive-income stream than most stocks that pay quarterly dividends or 10-year Treasury notes, which tend to feature semi-annual interest payments.
To add further security to Realty Income's dividend reliability, the company received an 'A' credit rating from Fitch Ratings in August, making it the fourth U.S. REIT to have at least one 'A' or equivalent rating from either Fitch, Moody's, or S&P Global. The high credit rating is a testament to Realty Income's ability to manage its debt, even though its debt balance has increased substantially in recent years.
A reliable high-yield stock for income investors
Realty Income is a great buy for long-term investors willing to look beyond the present high interest rates. The company has a diversified and high-quality portfolio. Its elite occupancy rate and contract structures create a long runway for steady returns. Realty Income also has an impressive track record of growing its monthly dividend, which is particularly appealing to investors looking to supplement retirement income.
That said, I'd expect the Realty Income sell-off to worsen if interest rates continue rising, so investors should only consider the stock if they're investing with at least a five-year time horizon.
Should you buy stock in Realty Income right now?
Before you buy stock in Realty Income, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $370,440!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,470,022!*
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Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Dollar General, Equinix, Life Time Group, Mid-America Apartment Communities, Moody's, Prologis, Realty Income, S&P Global, and Simon Property Group. The Motley Fool recommends Digital Realty Trust. The Motley Fool has a disclosure policy.

My Top Dividend Stock to Buy in October Yields 6% and Cuts Shareholders a Monthly Check

Key Points
American Express is the last remaining credit card stock in Berkshire's portfolio.
The New York Times Company is bucking the trend of the struggling newspaper industry.
DaVita specializes in treating kidney disease and providing dialysis services.
One of the secrets of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) and its success in the stock market has been its focus on value. Whether led by former Chief Executive Officer Warren Buffett or its current leader, Greg Abel, Berkshire has always focused on buying stocks when they are significantly below their intrinsic value.
On top of that, Berkshire's management team has sought companies that have significant advantages over their competitors -- an economic moat -- operating in a mature industry with reliable cash flow.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
That strategy has helped Berkshire Hathaway build an investment portfolio valued at about $350 billion -- and generate returns that averaged 19.7% during the past 60 years, nearly double the S&P 500's (SNPINDEX: ^GSPC) return.
In today's go-go market, which is focused so heavily on artificial intelligence, machine learning, and other technological advances, it's easy to forget that there are some great value stocks available -- and at comparatively dirt cheap prices. Three such stocks currently in Berkshire's portfolio are American Express (NYSE: AXP), The New York Times Company (NYSE: NYT), and DaVita (NYSE: DVA). Here's the case for buying and holding each of them right now.
Berkshire Hathaway stock No. 1: American Express
Berkshire Hathaway is deeply ingrained in the financial community. Its holdings include a significant stake in publicly traded companies such as Bank of America and Moody's, and it wholly owns several insurance companies, including GEICO. Until last year, it had stakes in American Express, Mastercard, and Visa.
But I've always believed that of the three, American Express is the superior stock. Apparently, Abel feels the same way, as he closed out Berkshire's positions in Mastercard and Visa in the first quarter.
I like American Express because of its market position -- it's geared toward more affluent customers with its gold and platinum card programs, both of which charge hefty annual fees. American Express increased its annual fee for its Platinum card to a whopping $895 earlier this year and offers perks valued at $3,500 to cardholders.
"Our platinum portfolio is now the fastest growing in our U.S. Consumer business; our best-in-class credit performance further strengthened; and we continued to attract a large number of new customers, particularly millennials and Gen Zs who represent greater lifetime value," CEO Stephen Squeri said.
Revenue in the second quarter was $19.6 billion, up 10% from a year ago, and net income of $3.11 billion was up 8%.
American Express is one of Berkshire's largest holdings, with 151.6 million shares, representing 13% of the company's portfolio. However, American Express stock is down 18% so far this year and currently sits 21% off its all-time high. But it's still my favorite financial stock in Berkshire's portfolio.
Berkshire Hathaway stock No. 2: The New York Times Company
We've all heard it: Newspapers are in trouble, and many have shut down -- about 3,500 in the U.S. alone, according to a Poynter study. The industry largely hasn't kept pace with the growth of digital media, losing both advertisers and subscribers.
But The New York Times has been able to buck that trend, embracing digital and capitalizing on its global brand. The company's newspaper had 13.35 million subscribers in the second quarter, with only 550,000 receiving printed copies.
Second-quarter revenue rose 11% from a year earlier to $762.5 million. And even though print advertising continued to decline, falling from $40 million to $35 million in a year, the company recorded a 21% gain in digital ads, bringing total ad revenue to $149 million, up from $134 million a year ago.
The company is a classic example of what Buffett and Abel appreciate: a well-run company with an economic moat that ensures long-term success. The shares are down 8% so far this year and 20% from their all-time highs.
Berkshire Hathaway stock No. 3: DaVita
Interestingly, Berkshire doesn't own many healthcare companies. It took a sizable share in UnitedHealth Group in the second quarter of 2025 before selling it less than a year later. And its Berkshire Hathaway Life company offers health reinsurance but not direct-to-consumer health coverage.
So DaVita holds a unique position in the Berkshire universe. The company focuses on kidney disease and chronic kidney failure, providing dialysis services and care, lab services, and research.
And that's an important field, particularly as the National Kidney Foundation estimates that 35.5 million U.S. adults have kidney disease, and one-third of adults are at risk from the disease.
Second quarter revenue rose to $3.55 billion, up from $3.20 billion a year ago. Net income was $343.2 million, up from $275.2 million in the second quarter of 2025, and diluted earnings per share were $4.02, up from $2.58 per share.
Unlike the other two companies on this list, DaVita is having a very good year, up 58%, but it's still 27% off its all-time highs.
Should you buy stock in American Express right now?
Before you buy stock in American Express, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
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Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express, Berkshire Hathaway, Mastercard, Moody's, The New York Times Co., and Visa. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.

3 Berkshire Hathaway Holdings to Buy While They Sit at Least 15% Below Their Highs

Key Points
S&P Global and Moody’s hold a near-duopoly in credit ratings services.
Those businesses are tethering more customers to their other financial services.
S&P Global (NYSE: SPGI) and Moody's (NYSE: MCO), two of the world's largest aggregators of financial data, have both rated debt for over a century. Poor's Publishing, which eventually merged with Standard Statistics to become S&P, sold its first bond ratings in 1916. Moody's launched its modern bond ratings business in 1909.
Today, S&P Global and Moody's both provide a much broader range of financial data, analytics, and credit rating services. However, both companies still typically generate more than 30% of their revenue from their industry-leading credit rating services. Let's see how those legacy businesses maintain their moats -- and how they support their other businesses.
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Why do S&P Global and Moody's have wide moats?
In 1975, the Securities and Exchange Commission (SEC) informally classified a handful of trusted ratings agencies --- including S&P, Moody's, and Fitch -- as Nationally Recognized Statistical Rating Organizations (NRSROs). In 2007, that classification was written into law.
Under that law, any issuer that wants to sell bonds to institutional buyers must get a rating from an NRSRO. Pension funds, mutual funds, insurance companies, and banks are also barred from holding any debt that doesn't carry an investment-grade rating from an approved NRSRO.
Newer and smaller ratings agencies, even if approved as NRSROs, would struggle against S&P, Moody's, and Fitch for three simple reasons. First, investors wouldn't trust their ratings. Second, issuers wouldn't pay them because an unknown rating wouldn't help them sell more bonds. Lastly, the big three agencies have built massive databases of financial data over the past century. Newcomers, even armed with the latest AI tools, can't aggregate that much data.
Most debt issuances require at least two NRSRO ratings. Together, S&P and Moody's control over 80% of that market. The rest mainly goes to Fitch, a subsidiary of the private Hearst Corporation. Therefore, it's practically impossible for a newcomer to cross that moat.
S&P Global and Moody's both use their debt rating businesses to acquire new customers. Any company that wants to issue debt must use their rating services, and that stickiness allows it to cross-sell its market data, risk-management software, research terminals, workflow tools, and other subscription-based services. Both companies leverage the reputation of their credit-rating services to sell other products, which in turn feed even more data into their ecosystems.
Can S&P Global and Moody's overcome their near-term challenges?
S&P Global and Moody's both seem like reliable long-term investments, but they've both underperformed the S&P 500 (SNPINDEX: ^GSPC) by a wide margin this year. Rising interest rates and Treasury yields mainly caused that pressure.
In mid-September, the Federal Reserve raised its benchmark rates for the first time in three years to tame inflation. The 10-Year Treasury yield also recently rose to 5.2% -- its highest level since 2007. That pressure will drive more issuers to throttle or halt new debt offerings, since they'll need to issue new debt at yields higher than those on CDs or Treasuries to remain competitive.
But even if near-term demand for their credit-rating services dries up, their market data and analytics services will continue to thrive through bear and bull markets. Regardless of the market's direction, investors will still need to use data from S&P Global and Moody's to analyze their investments. It will also continue to collect index licensing fees (for the S&P 500, Dow Jones, and other indexes) from fund managers and institutional investors.
In other words, S&P Global and Moody's -- which have weathered plenty of market downturns over the past century -- will continue to grow as the financial sector evolves. Both stocks are still reasonably valued at 23 and 26 times next year's earnings, respectively, and they should remain reliable stocks to buy, hold, and forget for the next few decades.
Should you buy stock in S&P Global right now?
Before you buy stock in S&P Global, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P Global wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $383,680!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,382,954!*
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*Stock Advisor returns as of September 28, 2026.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Moody's and S&P Global. The Motley Fool has a disclosure policy.

S&P Global and Moody's Have Rated Debt for More Than 100 Years. Here's Why That Moat Still Holds.

Key Points
American Express is a major Berkshire holding, although the stock has recently underperformed.
Chubb's strong underwriting and book value gains keep it well-positioned to continue climbing.
Moody's has a significant economic moat and strong growth track record.
Warren Buffett retired as chief executive officer of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) at the end of 2025, but he still remains chairman of the holding company. Moreover, since taking over as CEO at the start of 2026, Greg Abel has largely kept Berkshire's investing strategy the same as his predecessor.
Although Abel jettisoned positions in financial stocks such as Mastercard and Visa, Berkshire continues to hold large stakes in numerous other financial services companies. In fact, there may be as much opportunity, if not more, with some of these companies today as there is with Berkshire itself.
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 »
Three Berkshire holdings worth mentioning are American Express (NYSE: AXP), Chubb (NYSE: CB), and Moody's (NYSE: MCO).
1. American Express benefits from robust spending by affluent customers
American Express was one of the early Buffett investments. Back in 1964, Buffett's investment funds made a big contrarian wager on the company following its involvement in the "Salad Oil Scandal." However, it wasn't until the 1990s that the stock, commonly known as Amex, became part of the Berkshire stock portfolio.
Berkshire has held on to it since then, with its 22.5% stake in the payments and financial services company accounting for about 13.5% of the overall portfolio. In recent years, the shares have performed well, doubling in price since 2021, but the mixed recent performance may have many investors thinking twice about buying right now.
However, this recent turbulence may work in your favor if you have a long investing time horizon. Even as the company, which profits from both its closed-loop payments network and fee revenue on its famed payment cards, continues to benefit from robust spending by high-income households, investors reacted negatively to Amex's latest quarterly earnings release in July. While earnings of $4.53 per share came in ahead of forecasts, a slight shift in revenue mix and lukewarm outlook led to post-earnings weakness.
Considering some green shoots, such as CEO Stephen Squeri's post-earnings commentary regarding successful membership growth among young and affluent spenders, the market's recent reaction could prove overblown in hindsight. While not necessarily "cheap" at about 16 times forward earnings, the shares could rise in tandem with improved results. In the recent past, the stock, thanks to its affluent, spending-driven growth, has traded at well above 20 times earnings.
2. Chubb keeps climbing on underwriting gains
Compared to American Express, Chubb is a more recent Berkshire holding, with the position first disclosed in 2024. Then again, Berkshire is hardly a stranger to the industry. Since Buffett took control of Berkshire in the 1960s, this former textile company has made numerous investments in insurance stocks. It's acquired so many insurance companies outright that many classify it as an insurance company rather than as a conglomerate or holding company.
It's unclear whether Berkshire ultimately plans to buy this property and casualty (P&C) insurer outright. For the time being, however, it owns 8.9% of Chubb's shares outstanding. The position represents about 3.2% of Berkshire's stock portfolio. So, what's the big potential opportunity with Chubb shares? Over the past year, the stock has surged by nearly 25%.
Berkshire bought in because of Chubb's economic moat in specialty insurance and its higher-than-average underwriting margins. Based on the latest financial results, the bull case for Chubb still stands. During Q2 2026, Chubb reported 18.2% growth in core operating income year over year, with book value and tangible book value increasing by 12.3% and 17.1%, respectively, year over year.
Chubb currently trades for less than 12 times forward earnings. As other P&C insurers well-respected for underwriting strength, like WR Berkley and Markel Group, trade at even higher forward multiples, don't rule out the potential for Chubb to catch up.
3. A deep moat remains for Moody's
Moody's is one of just a handful of Wall Street credit raters. Due to this oligopoly, companies like this one have a deep economic moat because corporations and governments issuing debt must obtain credit ratings for institutional investors to buy the securities.
It's not surprising that Moody's became a major Berkshire holding back in the early 2000s. Currently, Berkshire owns a 14.2% stake in Moody's, an $11.5 billion position that accounts for 3.2% of its overall stock portfolio. If you're looking at Moody's shares for the first time today, they may seem a bit pricey. This financial services stock trades for about 24 times forward earnings.
Yet while that represents a premium to other credit rating stocks, like S&P Global, which trades for only 20 times forward earnings, keep in mind that S&P Global is far more diversified, with lower-margin, weaker-moat segments like Market Intelligence, where it competes with multiple financial data providers.
For Moody's, as long as its core business keeps knocking it out of the park, with 15% annualized sales growth, operating margins nearing 50%, as well as adjusted earnings and operating cash flow growth exceeding 30%, the stock remains well positioned to sustain and increase its premium valuation.
Should you buy stock in American Express right now?
Before you buy stock in American Express, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $412,074!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,314,319!*
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*Stock Advisor returns as of September 18, 2026.
American Express is an advertising partner of Motley Fool Money. Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express, Berkshire Hathaway, Markel Group, Mastercard, Moody's, S&P Global, Visa, and W. R. Berkley. The Motley Fool has a disclosure policy.

3 Financial Stocks Berkshire Hathaway Owns That I'd Buy Before Buying Berkshire Itself

Key Points
Ether remains the top blockchain for staking tokens and developing decentralized apps.
Solana’s higher speeds and lower fees are attracting more developers.
Zcash is attracting more attention as a fully anonymized alternative to Bitcoin.
Over the past 90 days, Bitcoin's (CRYPTO: BTC) price rose 21%. That rally was partly driven by the U.S. national debt reaching a record $40 trillion in late August, making the world's top cryptocurrency a more attractive hedge against the gradual debasement of the U.S. dollar.
But during that same period, 38% of all altcoins outperformed Bitcoin. Let's take a look at three of the most notable tokens -- Ethereum (CRYPTO: ETH), Solana (CRYPTO: SOL), and Zcash (CRYPTO: ZEC) -- and see why they should be on your investment radar.
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 »
Ethereum
Ether, the native token of the Ethereum blockchain, is the world's second most valuable cryptocurrency. Unlike Bitcoin, which is mined using the energy-intensive proof-of-work (PoW) consensus mechanism, Ether can't be mined. Instead, Ethereum uses the energy-efficient proof-of-stake (PoS) mechanism to enable staking (locking up tokens to earn rewards) and smart contracts (for developing decentralized apps and other tokenized assets).
Every time a user makes a transaction on Ethereum, they pay a "gas fee" with Ether. Therefore, Ether's value is driven by the growth of Ethereum's developer ecosystem. Today, Ethereum's Layer-1 (L1) blockchain is the world's largest developer-oriented PoS blockchain. Its Layer-2 (L2) blockchains, built on top of its L1 blockchain to process transactions off-chain at faster speeds and lower costs, widen its moat against newer competitors.
Ether's price has risen 41% over the past 90 days, and it could continue to rise as more investors view it as a long-term play on decentralized transactions and AI agents, which will need secure blockchains to facilitate machine-to-machine payments. Over a dozen companies, including Bitmine (NYSE: BMNR), have been building their own Ether treasuries.
Solana is the world's fastest PoS blockchain. It achieves higher transaction speeds than Ethereum's L1 blockchain by integrating its proprietary proof-of-history (PoH) mechanism, which timestamps transactions before they're validated, into its PoS blockchain. It doesn't serve as many developers as Ethereum does, but it's growing much faster.
A growing number of fintech companies -- including Circle, Visa, PayPal, and Stripe -- have been using Solana to settle stablecoin transactions, tokenize real-world assets (RWAs), and launch new cryptocurrencies. Moody's recently integrated its industry-standard credit-rating services into Solana's blockchain to cover tokenized bonds and fixed-income securities.
Solana's price has risen 42% over the past 90 days. That rally was driven by major protocol and scalability upgrades, which increased its maximum transaction size while reducing its fees, surging network activity, and growth in the number of new developers. Like Ethereum, Solana could play a crucial role in enabling AI agents to make machine-to-machine payments. More companies, including Forward Industries (NASDAQ: FWDI), are also building their own Solana treasuries.
Zcash is another PoW token like Bitcoin. Just like Bitcoin, it has a maximum supply of 21 million tokens, and its mining rewards are halved every four years.
However, Zcash can be mined faster than Bitcoin, and its users can fully hide their addresses and transactions. Bitcoin's addresses and transactions are completely public. So while Bitcoin is often compared to digital gold, Zcash is more comparable to digital cash in a private wallet.
Zcash's anonymous transactions have led to it being closely scrutinized by regulators. But over the past 90 days, its price still surged 193% as a major portion of its circulating supply was locked up in long-term holding structures, shielded pools, and ecosystem treasuries.
As Zcash's liquidity dried up, even smaller purchases drove up its price, drawing in even more investors. Some analysts also speculated that Zcash could reach a broader range of investors via spot exchange-traded funds (ETFs), as with Bitcoin, Ether, and Solana. Those potential catalysts made it a popular altcoin among investors seeking a "Bitcoin-like" cryptocurrency.
Should you buy stock in Bitcoin right now?
Before you buy stock in Bitcoin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $412,074!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,314,319!*
Now, it’s worth noting Stock Advisor’s total average return is 935% — a market-crushing outperformance compared to 210% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of September 17, 2026.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Moody's, PayPal, Solana, and Visa. The Motley Fool recommends Forward Industries and recommends the following options: short December 2026 $62.50 calls on PayPal. The Motley Fool has a disclosure policy.

Over the Past 90 Days, 38% of Altcoins Outperformed Bitcoin. These 3 Altcoins Need To Be On Your Investment Radar.

Key Points
With the exception of American Express, Berkshire's top stocks have performed well during the past year.
Cardholder perks and marketing expenses are eroding American Express' margins.
American Express depends on cardholders' discretionary spending, making it vulnerable to economic downturns.
It hasn't even been a year since Warren Buffett made Greg Abel chief executive officer of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB). Already, Abel has made a number of major portfolio overhauls, including trimming or eliminating stakes in many smaller positions, catapulting Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) to a top-five holding, and identifying Apple (NASDAQ: AAPL), American Express (NYSE: AXP), Coca-Cola (NYSE: KO), and Moody's (NYSE: MCO) as companies Berkshire expects to compound for decades.
Abel's approach is a testament to Buffett's philosophy of finding exceptional businesses and holding concentrated positions in them, rather than over-diversifying into companies Berkshire deems lower-quality.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Apple, American Express, Coca-Cola, Bank of America (NYSE: BAC), Alphabet, Chevron (NYSE: CVX), Occidental Petroleum (NYSE: OXY), and Mitsubishi (OTC: MSBHF) (OTC: MTSUY) make up a combined 75% of Berkshire's $365.2 billion public equity portfolio. With the exception of credit-card company American Express, all of these core holdings have outperformed the S&P 500 (SNPINDEX: ^GSPC) during the past year.
Here's why American Express is lagging behind the index, and why it could be one of the best Berkshire stocks to buy in September.
Solid earnings and guidance from American Express
American Express outperformed the S&P 500 for five consecutive years heading into 2026 -- putting pressure on the company to continue delivering impeccable results.
In the six months ended June 30, the company's revenue and net income rose by double-digit percentages, including a 14% increase in diluted earnings per share (EPS). It also reduced its share count by 3% through buybacks, which helped EPS gains outpace net income growth.
The company continues to increase its total number of cardholders. And spending among existing members is at its highest level in three years, adjusted for foreign exchange rates. American Express also raised its full-year outlook, and it now forecaste 10% year-over-year revenue growth for full year 2026.
Given the excellent results and forecast, you may be wondering why American Express has produced a total return of less than 1% during the past year while the other seven largest Berkshire positions and the S&P 500 have generated sizable gains. The answer is likely the cost of attracting and retaining members through generous cardholder perks.
Why American Express stock is under pressure
In fiscal 2025, American Express spent twice as much on cardmember rewards as it collected in net card fees. So in theory, the average American Express Gold Card member pays $325 in annual fees to American Express for the card, but American Express spends $650 on average on their rewards. American Express wins the loyalty of the cardmember through the value the rewards provide, and makes up for the loss through swipe fees from merchants -- which it refers to as discount revenue -- as well as interest on credit card and loan balances.
Still, consolidated expenses in the second quarter of 2026 rose 12% year-over-year, which outpaced consolidated revenue growth of 10%.
Expenses outpacing revenue can lead to lower margins. And as you can see in the following chart, America Express' sales and EPS have reached all-time highs -- but its gross margin is also at its lowest level in a decade.
Granted, part of the margin compression is due to the timing of American Express' refreshed U.S. Platinum cards, which feature a relatively high annual fee of $895 but also more generous rewards and one-time point bonuses. In its Form 10-Q filing for Q2 2026, American Express noted that "Marketing expense increased 6% year-over-year as we continued to invest to acquire, engage and retain high-spending, high credit-quality customers."
Unlike Visa (NYSE: V) and Mastercard (NYSE: MA) -- which are pure-play payment processors that partner with financial institutions to issue cards and bear credit risk -- American Express is both a payment processor and a card issuer. So while American Express wants to attract high-spending, affluent clients to maximize its swipe fees, it also doesn't want customers to spend to the point where they lose their credit quality. In this vein, the high marketing budget is somewhat justifiable because of the lifetime value of acquiring and retaining a quality American Express cardholder. This is especially true for younger generations like millennials and Gen Z, who are American Express' largest and fastest-growing cohort.
Aside from its lower margins and higher expenses, another reason American Express may be under pressure is concern about slowing economic growth and, in turn, lower discretionary spending -- even among affluent consumers. Or possibly artificial intelligence (AI) hitting the job market, especially among high-salary corporate employees. However, neither of those factors has yet to show up in America Express' results.
American Express can continue rewarding long-term investors
American Express will be more vulnerable than Visa and Mastercard amid economic uncertainty and shifts in consumer spending on discretionary goods. But investors who believe in the American Express ecosystem, the company's risk management, and its ability to attract and retain cardholders are getting an excellent opportunity to buy the stock at a compelling valuation of 19.7 times trailing-12-month earnings.
The durability of American Express' business model, paired with its attractive valuation, makes it arguably the best buy among Berkshire's eight largest holdings in September.
Should you buy stock in American Express right now?
Before you buy stock in American Express, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $420,109!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,303,689!*
Now, it’s worth noting Stock Advisor’s total average return is 938% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of September 17, 2026.
American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Daniel Foelber has positions in American Express. The Motley Fool has positions in and recommends Alphabet, American Express, Apple, Berkshire Hathaway, Chevron, Mastercard, Moody's, and Visa. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

Greg Abel Has 75% of Berkshire Hathaway's Portfolio Invested in Just 8 Stocks. Is the 1 That's Lagging Behind the S&P 500 the Best Buy Now?

Moody’s Corporation MCO agreed to acquire a minority stake in Philippine Rating Services Corporation (PhilRatings), a leading domestic credit rating agency in the Philippines. The investment is expected to strengthen Moody’s position in the Philippine domestic debt market while expanding its network of domestic rating agency affiliates across Asia Pacific.
The investment adds local-market capabilities to Moody’s global ratings franchise, with PhilRatings bringing established expertise in the Philippine market.
Moody’s Expands Local Market Reach in the Philippines
The PhilRatings investment strengthens Moody’s ability to participate in the Philippines’ developing domestic debt market. Headquartered in Manila, PhilRatings provides credit ratings and research that support the development of the country’s debt capital markets.
PhilRatings will continue to operate independently, retaining its own management, governance, and credit-rating processes. The expanded affiliate network supports Moody’s ability to build market-specific capabilities as domestic bond markets develop and issuers increasingly rely on local debt markets for funding.
Philippines offers long-term potential for Moody’s as infrastructure financing requirements support further development of the country’s capital markets. More than $100 billion of planned infrastructure investment over the next three years could support financing demand and further activity in the domestic debt market.
Strong Ratings Activity Supports Moody’s Expansion Strategy
Moody’s Investors Service (MIS) division continued to benefit from strong debt issuance activity in the first half of 2026. MIS transaction revenues increased 21% year over year, supported by strong investment-grade issuance and higher debt-market activity.
MCO has a presence in more than 55 domestic markets globally and views deeper participation in developing markets as an important long-term growth opportunity. The company previously expanded its presence in markets including India and Chile through investments in local rating agencies. Moody’s also acquired Middle East Rating & Investors Service in 2026, following its 2025 investment in ICR Chile. This solidified its presence in Latin America’s domestic credit markets.
Our Take on Moody’s Expansion Plan
The PhilRatings investment is strategically important as it strengthens MCO’s access to the Philippines’ domestic debt market and broadens its network of local rating-agency affiliates across Asia Pacific.
The investment also aligns with Moody’s broader strategy of expanding its presence in domestic and developing markets through local partnerships and affiliates. The deal is primarily focused on strengthening the company’s long-term positioning and local-market capabilities in the Philippines.
Moody’s Price Performance & Zacks Rank
Over the past six months, MCO’s shares have gained 6.0%, outperforming the industry’s 4.9% growth.
6-Month Price Performance
Currently, Moody’s carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Similar Steps by Other Financial Firms
Franklin Templeton, Inc. BEN is set to expand its European alternatives platform as its real estate arm, Clarion Partners, LLC (“Clarion”), agreed to be acquire a majority stake in Stoneshield Capital. The deal is expected to closed in the fourth quarter of 2026, subject to customary conditions and regulatory approvals. Stoneshield focuses on living and student housing, digital infrastructure, hospitality and critical infrastructure, strengthening Clarion’s European real asset capabilities.
The deal will add Stoneshield’s $9 billion in assets under management (AUM) to Clarion, taking its European AUM to $13 billion and total AUM to $82 billion. Franklin’s alternatives AUM will exceed $300 billion following the transaction. The acquisition supports BEN’s strategy of expanding alternatives and could broaden its investment offerings, attract additional capital and support long-term fee-earning AUM growth.
WaFd, Inc. WAFD is set to merge with EverBank Financial Corp., a deal expected to deliver 29% earnings per share accretion in 2027 and recover tangible book value dilution in less than two years. The combined company targets nearly 15% return on tangible common equity after realizing expected cost synergies.
The merger will strengthen WAFD’s funding base by combining its commercial deposits and branch network with EverBank’s nationwide direct-to-consumer platform. It will also broaden commercial lending and wealth-management capabilities, supporting a larger and more diversified banking franchise. Regulatory and shareholder approvals, integration execution and synergy realization remain key factors ahead of the expected early-2027 closing.
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Can MCO's PhilRatings Investment Bolster Its Asia-Pacific Presence?

Key Points
American Express’s closed-loop system makes it noticeably different from open-loop systems operated by Visa and Mastercard.
American Express is an exception to the trend of Berkshire Hathaway reducing its exposure to financial stocks.
Berkshire’s stake in American Express has increased due to stock buybacks, not additional share purchases.
Warren Buffett's hand-picked successor, Greg Abel, became chief executive officer of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) on Jan. 1. Within months, he made a number of changes, including selling stakes in many smaller holdings, such as Visa (NYSE: V) and Mastercard (NYSE: MA), and pole-vaulting Alphabet into a core holding (on Buffett's recommendation). Just as meaningful was inaction on key holdings like American Express (NYSE: AXP) and Coca-Cola (NYSE: KO) -- which signaled a vote of confidence amid the portfolio reshuffling.
American Express is underperforming Visa and Mastercard year-to-date. So at first glance, it may look like it was a mistake to sell Berkshire's entire stakes in Visa and Mastercard and bet solely on American Express. But context is in order.
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American Express is underperforming its peers
American Express is a huge Berkshire Hathaway holding -- second only to Apple (NASDAQ: AAPL). And like Coca-Cola, Berkshire has owned it for decades, whereas Visa and Mastercard were relatively small holdings acquired more recently. Similarly, Berkshire sold its entire Amazon stake and significantly increased its stake in Alphabet, thereby reducing overlap in the cloud computing and artificial intelligence sector and centering the portfolio around a core holding.
In his first letter to shareholders as CEO, Greg Abel identified American Express as a stock that Berkshire understands well, trusts its management team, and expects to compound over the long term. That trust extends far beyond a matter of months. And in his letter, Abel said Berkshire's concentrated approach will continue, and investors can expect limited activity in holdings such as Apple, American Express, Coca-Cola, and Moody's, although adjustments may be made if fundamentals change.
Despite underperforming Visa and Mastercard year-to-date -- American Express's fundamentals remain rock solid. The company is generating all time high revenue and earnings and has forecast 10% year-over-year revenue growth in 2026. Expenses are on the rise, and gross margins have compressed as American Express is spending more on advertising and cardmember rewards. But those expenses could pay off if they help attract and retain high-quality customers.
American Express is a great value
American Express has become Berkshire's second-largest holding, behind Apple, due to a combination of its rising stock price and aggressive stock buybacks. Buybacks benefit long-term shareholders by reducing the share count outstanding, which accelerates earnings-per-share growth and makes the stock a better value, while also giving loyal shareholders a larger stake in the company.
Berkshire essentially completed its purchases of American Express stock in 1995. During the past 31 years, American Express has reduced its share count by almost 59%. Berkshire now owns roughly 24% of the entire company thanks to buybacks -- a position that's worth $49.2 billion.
In addition to its fundamentals and excellent business model, American Express's huge buyback program and increasing dividend are reasons to buy and hold the stock over the long term. Its price-to-earnings (P/E) ratio has come down to 19.6, and its forward P/E is now just 16.3 -- far lower than Visa's and Mastercard's forward P/E of about 25.
However, part of the reason American Express trades at a steep discount to its peers is that investors view it as a middle ground between high-margin payment processing and capital-intensive bank stocks, which tend to sport very low valuations. American Express operates a closed-loop system -- serving as the payment processor, card issuer, and lender. Whereas Visa and Mastercard offer open-loop systems by partnering with financial institutions that issue cards, manage the cardmember rewards programs, and bear the credit risk.
American Express serves a key role in Berkshire's portfolio
When Abel took over as CEO, the biggest question mark was how he would handle Berkshire's mega holdings. It's clear that Berkshire still views American Express as a long-term compounder, and it's its highest conviction stock in the payment processing sector.
Under Buffett, Berkshire repeatedly trimmed its position in Bank of America and fully exited its Citigroup position in late 2025. So, keeping American Express is a way to retain exposure to a high-quality, multi-faceted financial stock that is distinct from Berkshire's other public equity holdings and its company-controlled insurance businesses.
Another reason Abel may have wanted to continue trimming financial stocks is that the sector has run up significantly in recent years, and Abel may have wanted to book the gains at favorable tax rates and shore up cash to invest in growth plays like Alphabet. Berkshire still has an enormous cash, cash equivalent, and Treasury Bill position valued at $365.5 billion as of June 30, but that's down 8% from March 31, due to the rapid accumulation of Alphabet stock.
Holding American Express is the right long-term move
Investors shouldn't judge Berkshire's holdings over a short period, but rather, how its high conviction bets stack up compared to the benchmarks during at least a three to five-year period. To be sure, Abel had the chance to sell some American Express shares near an all-time high as part of a broader portfolio restructuring. So criticism would be more warranted if American Express drastically underperforms Visa, Mastercard, and the financial sector over a long-term period rather than a handful of months.
However, I fully expect American Express to remain an excellent long-term buy for patient investors, given its customer loyalty, relatively straightforward business model, and recurring revenue from cardholder and swipe fees.
Add it all up, and American Express remains a top blue-chip dividend stock to buy now.
Should you buy stock in American Express right now?
Before you buy stock in American Express, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $433,160!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,296,254!*
Now, it’s worth noting Stock Advisor’s total average return is 949% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of September 15, 2026.
American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Daniel Foelber has positions in American Express. The Motley Fool has positions in and recommends Amazon, American Express, Apple, Berkshire Hathaway, Mastercard, Moody's, and Visa. The Motley Fool has a disclosure policy.

Did Greg Abel Already Make His First Big Mistake as Berkshire Hathaway CEO?

Key Points
Berkshire is invested in AI through Apple, Alphabet, and Moody’s.
But those stocks have all underperformed Nvidia over the past five years.
Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) invests in dozens of companies across its $361 billion portfolio. However, the conglomerate isn't heavily invested in the AI boom -- and it doesn't hold a single share of Nvidia (NASDAQ: NVDA), the world's top AI chipmaker.
The three biggest AI-driven stocks that Berkshire still owns are Apple (NASDAQ: AAPL), Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), and Moody's (NYSE: MCO). Let's see how these stocks are exposed to the AI market -- and why they're not comparable to Nvidia.
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How much do these three stocks matter to Berkshire?
Apple is Berkshire's top holding, accounting for 20.2% of its portfolio. Apple generates most of its revenue from the iPhone and other hardware. Still, it's using its Apple Intelligence AI suite to increase the stickiness of its ecosystem and subscription-based services. It's also developed custom chips to run edge AI models locally rather than on a cloud-based platform.
Alphabet, which accounts for 7.4% of Berkshire's portfolio and ranks as its fifth-largest holding, is a more focused AI play. Its Google Cloud Platform and custom chips provide the infrastructure for AI applications, while its Gemini large language model (LLM) and AI upgrades for its search, advertising, and Workspace services are widening its moat and locking in more customers.
Moody's, which accounts for 3.4% of Berkshire's portfolio as its ninth-largest holding, is one of the largest providers of financial data in America. It's using AI to upgrade its economic forecasts and credit rating services, making it a more valuable platform for its enterprise customers.
But why aren't these three stocks comparable to Nvidia?
Apple, Alphabet, and Moody's are all sound long-term investments that have generated total returns of 113%, 138%, and 35%, respectively, over the past five years. During that same period, Nvidia's stock delivered a total return of 912% as the AI market expanded.
Past performance never guarantees future gains, but Nvidia still has plenty of irons in the fire. It's the world's largest producer of discrete GPUs for data centers, which are used to train the world's most advanced LLMs. Most of the world's top AI companies -- including Google, Microsoft, OpenAI, and Anthropic -- use its data center GPUs. Nvidia also locks in those customers with its proprietary software and services.
In its latest quarter, Nvidia generated 93% of its revenue from its data center chips. It faces some competition from AMD's cheaper data center GPUs, Broadcom's custom AI accelerators, and newer inference-oriented chips, but Nvidia will likely dominate the general-purpose AI training market for the foreseeable future.
From fiscal 2026 (which ended this January) to fiscal 2029, analysts expect Nvidia's revenue and EPS to both grow at CAGRs of 59%. Those are incredible growth rates for a stock that trades at 23 times this year's earnings. Apple, Alphabet, and Moody's -- which are all growing at much slower rates -- trade at 36, 16, and 30 times this year's earnings, respectively.
Why did Berkshire miss out on Nvidia?
Under Warren Buffett, Berkshire avoided Nvidia for the same reason it shunned most tech stocks: it wasn't a business he fully understood. Buffett eventually invested in Apple as a consumer goods play -- while his portfolio managers likely initiated Berkshire's position in Alphabet -- but he likely avoided Nvidia because it was tough to gauge its long-term growth.
Buffett's successor, Greg Abel, also favors Apple and Alphabet over Nvidia as a long-term AI play because they're less exposed to the semiconductor sector's boom-and-bust cycles. As the previous CEO of Berkshire Hathaway Energy, Abel also likely sees more growth opportunities in energy infrastructure stocks in the AI market than in individual chipmakers.
So while Berkshire seems to be leaving some money on the table by shunning Nvidia, it's still exposed to the AI market's growth through some of its top stocks. Over the long term, we'll see whether that conservative strategy pays off -- or misses a major technological shift.
Should you buy stock in Berkshire Hathaway right now?
Before you buy stock in Berkshire Hathaway, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Leo Sun has positions in Apple. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Berkshire Hathaway, Broadcom, Microsoft, Moody's, and Nvidia. The Motley Fool has a disclosure policy.