Following Warren Buffett's transition from CEO of Berkshire Hathaway at the close of 2025, his investment philosophy remains a cornerstone of the conglomerate's strategy. This analysis examines three companies that continue to embody Buffett's renowned buy-and-hold approach, characterized by robust economic advantages and consistent profitability, making them compelling investment opportunities. Conversely, one stock currently held by Berkshire Hathaway is identified as less appealing due to its market performance and valuation metrics.
Alphabet, a significant acquisition during Buffett's final years as CEO, exemplifies a classic Buffett-style investment. Despite Buffett's historical reluctance toward technology stocks, Alphabet's dominant position in internet search and web browsing provides an almost unassailable economic moat. Google's search engine commands over 90% of global market share, complemented by Chrome's 71% browser market share. This dominance translated into substantial advertising revenue of $74.18 billion in the third quarter, forming the bulk of its $102.3 billion total sales. Furthermore, Google Cloud is rapidly expanding, generating $15.1 billion in revenue and solidifying its role as a critical business segment. Berkshire Hathaway's strategic acquisition of 17.8 million Alphabet shares, coinciding with a reduction in its Apple holdings, underscores the company's confidence in Alphabet's long-term value, aligning with Buffett's preference for businesses with enduring competitive advantages.
Amazon, despite a challenging 2025 marked by tariff impacts and a modest 5% stock increase, remains a significant holding for Berkshire Hathaway, which owns 10 million shares. The company's e-commerce segment possesses an unparalleled economic moat. Even with a profit margin of only 4.5% from North American sales ($106.27 billion) and 2.9% from its international segment ($40.9 billion) in the third quarter of 2025, Amazon's future appears promising. A substantial portion of its $125 billion capital expenditure in 2025 was directed towards its highly profitable Amazon Web Services (AWS) cloud computing division, data centers, and the development of proprietary Trainium AI chips. Amazon's continued investment in capital expenditure for 2026 is crucial for maintaining its leading 29% global cloud computing market share, automating fulfillment centers with AI, and reducing reliance on external chip suppliers. This strategic spending positions Amazon for a significantly improved performance in the coming year.
Moody's, a company Buffett began investing in 25 years ago post its spin-off from Dun & Bradstreet, perfectly fits the mold of a 'Buffett stock.' Its core business of assigning credit ratings to companies and governments provides an indispensable service, offering insights into financial health that are closely monitored by regulators and investors. The breadth and influence of Moody's credit ratings are virtually unmatched. In the third quarter, Moody's reported an 11% year-over-year revenue increase to $2 billion and a 22% rise in earnings per share (EPS) to $3.92. The company also raised its full-year EPS guidance to a range of $14.50 to $14.75, indicating a 17% gain at the midpoint. Berkshire Hathaway maintains a substantial stake, holding 13.8% of Moody's stock, or approximately 24.7 million shares, reflecting the enduring appeal of its fundamental business model.
However, Aon, an insurance brokerage and risk management firm, is presented as a stock to potentially reconsider. While Aon's business, which includes property, casualty, and business services insurance, as well as reinsurance brokerage and human capital services, aligns with Buffett's extensive experience in the insurance sector (given Berkshire Hathaway's ownership of GEICO), its recent performance raises concerns. Although Aon reported a 7% increase in third-quarter revenue and a 12% rise in EPS to $3.05, its stock remained flat over the past 12 months, significantly underperforming the S&P 500's 18% gain. Additionally, Aon's price-to-earnings (P/E) ratio of 28.1 is considerably higher than the 18 average for the property/casualty insurance segment. Despite Berkshire Hathaway owning 4.1 million shares, the current valuation and stagnant performance suggest it might not be an opportune time for new investment.
In summary, while Warren Buffett has stepped down as CEO of Berkshire Hathaway, his investment principles continue to guide the company's portfolio. Alphabet, Amazon, and Moody's represent strong candidates for investment, characterized by deep economic moats, consistent earnings, and strategic growth initiatives. These companies align with Buffett's long-term vision of investing in quality businesses with sustainable competitive advantages. Conversely, Aon, despite its industry alignment, faces challenges with its current valuation and recent market performance, warranting a cautious approach from investors. The core lesson from Buffett's strategy remains clear: seek out companies with robust fundamentals, strong management, and significant barriers to entry for competitors, while being mindful of valuation and market trends.