When Warren Buffett stepped down as CEO of Berkshire Hathaway(NYSE: BRKA)(NYSE: BRKB) at the end of 2025, he left behind an equity portfolio packed with durable, cash-generating businesses.
But there were some surprising shifts to the portfolio before Buffett left. While the conglomerate is famous for its long-held, massive stakes in consumer brands and financial institutions, the portfolio has also slowly evolved to include dominant technology companies.
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Two notable holdings that highlight this mix of old and new are American Express(NYSE: AXP) and Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL).
American Express is a legendary, decades-old Buffett bet that has compounded capital for years.
Alphabet, on the other hand, is a more recent addition to the portfolio. And because the purchase occurred before Buffett stepped down, it carries notable significance for investors as one of the last meaningful portfolio additions under his leadership.
With both stocks earning a spot in the Oracle of Omaha’s final portfolio, investors might wonder how they stack up against each other.
When comparing the two, I think one is a better buy.
Image source: The Motley Fool.
It’s hard to overstate just how important American Express is to Berkshire Hathaway.
When Buffett stepped down as CEO at the end of 2025, the integrated payments company stood as the conglomerate’s second-largest equity position.
With the position valued at more than $45 billion as of this writing, American Express accounts for about 15% of Berkshire’s total equity portfolio (assuming Berkshire still owns the same number of shares it held at the end of Q4).
The bull case for the stock is built on the company’s powerful brand, a highly affluent customer base, a closed-loop payments network that captures value on both sides of a transaction, and net interest income from lending.
Highlighting the franchise’s robust momentum lately, American Express reported fourth-quarter 2025 revenue of $19.0 billion, up 10% year over year. For the full year, the company posted a record $72.2 billion in revenue.
One of the company’s secret sauces is its high-fee cards that come packed with perks for its members; American Express generated a record $10 billion in net card fees in 2025, marking its 30th consecutive quarter of double-digit card fee growth.
But there’s a reason the stock trades at what might, on the surface, seem like a cheap price-to-earnings ratio multiple of 20.
Unlike pure-play payments networks (e.g., Visa and Mastercard), which simply collect a fee for routing transactions, American Express is also a lender. It issues credit directly to its cardholders. This gives the company a liability-sensitive balance sheet. In a severe economic downturn, American Express is exposed to credit risk and loan defaults.
This dynamic is why the stock typically commands a lower multiple than companies with similar growth profiles but in different industries.
At a valuation like this, American Express looks reasonably priced for a high-quality financial institution. The multiple accurately reflects the inherent cyclicality and balance-sheet risk of the lending business.
Though Alphabet accounted for just under 2% of Berkshire’s total equity holdings as of the conglomerate’s last public portfolio update, the tech stock shouldn’t be underestimated.
Alphabet’s business model looks quite different, and its growth trajectory is notably steeper.
The tech giant recently reported a massive fourth quarter for 2025, with total revenue surging 18% year over year to $113.8 billion.
The company’s core Google Services segment, which houses its dominant search engine and YouTube, continues to deliver steady results, with revenue rising 14% year over year to $95.9 billion.
But the real catalyst for the company these days is its fast-growing cloud computing business.
Alphabet’s Google Cloud segment saw revenue surge 48% year over year in Q4 to $17.7 billion.
Even better, this top-line growth is translating into massive profitability gains. Net income across the entire business jumped 30% year over year in Q4 — and earnings per share rose 31% to $2.82.
This combination of a highly profitable core advertising engine and a booming enterprise cloud business gives Alphabet a remarkably durable financial profile.
Even more, the company’s aggressive investment posture suggests that management expects strong growth to persist or even accelerate. To support the massive demand it’s seeing for artificial intelligence (AI) compute, Alphabet expects to spend an enormous $175 billion to $185 billion on capital expenditures in 2026.
And the company’s balance sheet is a fortress, packed with about $127 billion in cash and marketable securities — and completely free of the lending liabilities that burden financial institutions like American Express.
Of course, investors have to pay up for this quality. Alphabet’s price-to-earnings ratio of about 28 as of this writing is significantly higher than what investors pay for American Express.
But at that valuation, investors are paying for broad-based double-digit growth across almost every major segment of a highly diversified tech giant.
At 28 times earnings, the valuation assumes Alphabet’s cloud margins will keep expanding, and its core services will remain resilient. And given the company’s recent execution, that is arguably a very reasonable expectation.
Both American Express and Alphabet are exceptional businesses that have rightfully earned their places in Berkshire Hathaway’s portfolio.
But when comparing the two today, Alphabet looks like the clear winner.
American Express’s multiple is constrained by the reality of its liability-sensitive balance sheet and its inherent exposure to consumer credit risk. Alphabet, meanwhile, is delivering broad-based, double-digit top-line growth while aggressively scaling its cloud computing business. Of course, there are risks, including the possibility that Alphabet’s capital expenditures do not yield an attractive long-term return. But even with Alphabet’s risks, the stock still looks attractive.
For investors looking for a resilient compounder to buy and hold for the next decade, Alphabet may be the more compelling choice
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American Express is an advertising partner of Motley Fool Money. Daniel Sparks and his clients have positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, Mastercard, and Visa. The Motley Fool has a disclosure policy.
