When Warren Buffett resigned as CEO Berkshire Hathaway(NYSE: BRKA )(NYSE: BRKB ) At the end of 2025, he left an equity portfolio filled with sustainable, cash-generating businesses.
But there were some surprising portfolio changes before Buffett left. While the group is known for its long-standing broad stake in consumer brands and financial institutions, the portfolio has also slowly grown to include dominant technology companies.
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Two remarkable reserves that highlight this blend of old and new American Express(NYSE: AXP ) and the alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL ).
American Express is a legendary, decades-old buffet bet that has built capital for years.
Alphabet, on the other hand, is a more recent addition to the portfolio. And because the purchase was made before Buffett stepped down, it’s a significant addition to the portfolio of the latest portfolios under his leadership.
With both stocks earning a spot in the latest Oracle of Omaha portfolio, investors may be wondering how they stack up against each other.
When comparing the two, I think one is the better buy.
Image source: Motley Fool.
It’s hard to believe how important American Express is to Berkshire Hathaway.
When Buffett steps down as CEO at the end of 2025, the integrated payments company stands as the company’s second-largest equity position.
With a position valued at more than $45 billion as of this writing, American Express makes up about 15% of Berkshire’s total equity portfolio (assuming Berkshire still owns the same number of shares it did at the end of Q4).
Bull’s case for the stock is built on the company’s strong brand, rich customer base, connected payments network that captures value on both sides of the transaction, and net interest income from lending.
Highlighting the franchise’s strong momentum recently, 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 high-fee cards loaded with perks for members; American Express has set a record $10 billion in net card fees by 2025, marking the 30th consecutive quarter of double-digit card fee growth.
But there’s a reason the stock is trading at what might on the surface look like a bargain price-to-earnings ratio of 20.
Unlike pure-play payment networks (eg, visa and MasterCard), which simply collects a fee for shipping, American Express is also a lender. It gives credit directly to its cardholders. This gives the company a liability sensitive balance sheet. In a severe economic crisis, American Express is exposed to credit risk and loan defaults.
This dynamic is why stocks typically command lower multiples than companies with similar growth profiles but in different industries.
At a value like this, American Express seems like a fair price for a high-quality financial institution. Most accurately reflect the inherent cyclicality and balance sheet risk of the lending business.
Although Alphabet accounted for just under 2% of Berkshire’s total equity holdings as of the company’s last public portfolio update, the tech stock should not be underestimated.
Alphabet’s business model looks very different, and its growth trajectory is remarkably fast.
The tech giant recently reported a big fourth quarter for 2025, with total revenue up 18% year over year to $113.8 billion.
The company’s core Google Services division, which includes its dominant search engine and YouTube, delivered solid results, with revenue rising 14% year-over-year to $95.9 billion.
But the main catalyst for the company these days is its fast-growing cloud computing business.
Alphabet’s Google Cloud division saw revenue rise 48% year-over-year to $17.7 billion in Q4.
Even better, this top-line growth translates into greater profit gains. Net income across the business jumped 30% year-over-year in Q4 — and earnings per share rose 31% to $2.82.
This combination of a highly profitable native advertising engine and a thriving business cloud business gives Alphabet a remarkably sustainable financial profile.
Even more, the company’s aggressive investment situation suggests that management expects strong growth to continue or even accelerate. To support the growing demand for artificial intelligence (AI) computing, Alphabet expects to spend $175 billion to $185 billion on capital expenditures in 2026.
And the company’s balance sheet is a fortress, flush with about $127 billion in cash and marketable securities — and completely free of the debt obligations that burden financial institutions like American Express.
Of course, investors have to pay for this quality. Alphabet’s price-to-earnings ratio of about 28 as of this writing is significantly higher than what investors are paying American Express.
But at this valuation, investors are paying for broad-based double-digit growth in nearly every major segment of the highly diversified tech giant.
At 28 times earnings, the valuation assumes that Alphabet’s cloud margins will continue to expand, and that its core services will be resilient. And given the company’s recent execution, that’s actually a very reasonable expectation.
Both American Express and Alphabet are exceptional businesses that have rightly 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 limited by the reality of its liability-sensitive balance sheet and its main exposure to consumer credit risk. Alphabet, meanwhile, is delivering broad-based, double-digit top-line growth while rapidly scaling its cloud computing business. Of course, there are risks, including the possibility that Alphabet’s capital expenditures may not yield attractive long-term returns. But even with Alphabet’s risks, the stock still looks attractive.
For investors looking for a flexible mix to buy and hold for the next decade, Alphabet may be a more attractive option.
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American Express is an advertising partner of Motley Fool Money. Daniel Sparks and his clients hold positions in Berkshire Hathaway. The Motley Fool owns and offers positions at Alphabet, Berkshire Hathaway, MasterCard and Visa. Motley Fool has a disclosure policy.
Alphabet vs. American Express: Which Warren Buffett Stock is the Better Buy? Originally published by Motley Fool
