Warren Buffett's Successor, Greg Abel, Has 69% of Berkshire Hathaway's Portfolio Invested in Just 5 Stocks. Here's My Top Pick for October.

Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) CEO Greg Abel has made several significant changes to the $299 billion portfolio since he took over in January. The biggest change so far appears to be its concentration. The portfolio has shrunk to 29 stocks from 42 at the end of 2025, while assets have grown by 9%, from $274 billion to $299 billion.

The top five holdings made up around 70% of the portfolio at the end of 2025, when Warren Buffett stepped down as CEO. After the second quarter of 2026, the top five holdings were still right around 70%, 69% to be exact, but there is one notable difference.

Greg Abel, Berkshire Hathaway CEO. Image source: Getty Images.

Currently, Apple is the largest position at 22%, followed by American Express at 17.1%, Coca-Cola at 10.9%, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) at 9.4%, and Bank of America at 9.2%.

At the end of 2025, Apple was at 22.6%, American Express was at 20.5%, Bank of America was at 10.4%, Coca-Cola was at 10.2%, and Chevron was at 7.2%. Google's parent, Alphabet, accounted for just 2% of the portfolio and was the 10th-largest holding.

Aside from exiting more than a dozen positions, Abel's biggest move over the first two quarters has been piling assets into Alphabet. And when the third-quarter 13F comes out, I would not be shocked to see Abel boost his position in Alphabet even further.

Here's why Alphabet is a top buy in October.

A $514 billion backlog

Hedge fund managers were increasing their holdings of Alphabet stock in September, according to the latest Data Insights Crowding Report. The trend will likely continue in October mainly due to Alphabet's cheap valuation. The stock is trading at 16 times earnings. It hasn't been this cheap in at least 14 years going back to 2012, and probably longer.

But that is a bit misleading because the P/E was skewed lower in Q2 after Alphabet had a massive earnings gain of 335% year over year to $112 billion. About $98 billion of that came primarily from equity investments in Space Exploration Technologies and Anthropic.

But thes stock's forward P/E is still fairly low at 22, and it has a booming backlog of $514 billion within its cloud business, up 50% from the previous quarter. That's more than double the $240 billion backlog that Alphabet had at the end of 2025.

On the second-quarter earnings call, Alphabet CFO Anat Ashkenazi said the company expects to recognize just over 50% of the total cloud backlog as revenue over the next 24 months.

Apple to Alphabet

Alphabet presents an opportunity that Abel will likely not pass up like his predecessor, Buffett. Some 10 years ago, in the first quarter of 2016, Buffett bought Apple stock for the first time after its valuation sank with a price-to-earnings ratio of 10 -- its lowest in years at the time. Buffett kept loading up on Apple over the next several quarters, and by the end of 2017, it was Berkshire Hathaway's largest holding.

I expect to see a similar pattern here with Abel and Alphabet. Alphabet may not become Apple's largest holding, but the trajectory is similar. It has only been a year since Berkshire first added Alphabet to its portfolio in the third quarter of 2025. Just three quarters later, it's Berkshire's fourth-largest holding, and at this valuation, look for Abel to keep adding to the position.

It's not an apples-to-apples comparison (or Apple to Alphabet, as it were) given that Alphabet's low P/E ratio is skewed. But the speed at which Abel is adding Alphabet stock is reminiscent of how rapidly Buffett grew the Apple position.

The market is concerned about Alphabet's massive capital expenditures (capex), which it raised to $195 billion to $205 billion for fiscal 2026, up from the previous estimate of $180 billion to $190 billion. The increase is mostly due to an acceleration in capacity to meet surging demand. Alphabet expects capex spending to "increase significantly in 2027." This has drained Alphabet's free cash flow, which management anticipates will remain under pressure.

But during this once-in-a-generation AI boom, this is the cost of doing business for these hyperscalers to keep up with the insatiable demand. Amazon has made similar capex commitments, and it appears to be paying off. I'd expect Alphabet is making a similarly calculated move to meet demand.

Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, American Express, Apple, Berkshire Hathaway, and Chevron. The Motley Fool has a disclosure policy.