Greg Abel's First Move as Berkshire CEO: Why Apple Will Keep Compounding

Warren Buffett’s transition out of active leadership marked a pivotal moment for Berkshire Hathaway, with Greg Abel stepping into the CEO role at the beginning of 2026. In his inaugural shareholder letter, Abel laid out a vision for Berkshire’s future—and for investors watching the conglomerate’s next chapter, the message was unmistakable: patience and fundamental belief in exceptional businesses matter more than short-term portfolio adjustments.

Abel emphasized that Berkshire will pursue only “minimal changes” to its four largest equity positions: American Express, Coca-Cola, Moody’s, and Apple. This restraint wasn’t born from indecision. Rather, it reflects a deliberate conviction that these companies will generate value over the long haul. “These businesses will sustain their growth trajectories for decades,” Abel conveyed in his letter—a striking statement that signals the depth of his confidence in the underlying management teams and business models.

What Abel’s Letter Signals About Berkshire’s Long-Term Holdings

The broader takeaway from Abel’s inaugural communication to shareholders reveals a philosophy rooted in business fundamentals rather than valuation opportunism. The new Berkshire chief made clear that any meaningful decision to alter positions in the company’s core holdings would hinge on whether the underlying economics of those businesses have fundamentally shifted—not whether the stock price has moved.

This approach stands in contrast to conventional portfolio management, where multiples and relative valuations often drive trading decisions. For Greg Abel, however, the calculus is different. If the business remains sound and management remains capable, Berkshire remains invested. This mentality reflects a maturity in investment thinking that suggests Abel is very much aligned with the legacy Buffett built, while charting his own course as the new steward of Berkshire’s capital.

The signal here matters enormously for investors holding these core positions. Abel’s explicit endorsement of Apple, American Express, Coca-Cola, and Moody’s carries real weight. He didn’t just say these are good companies; he indicated that Berkshire’s leadership respects their management teams deeply and understands their business models thoroughly—criteria that few public companies can claim to meet.

Apple’s Fundamentals Justify Greg Abel’s Confidence

Apple’s recent financial performance provides concrete evidence for why Greg Abel is comfortable with Berkshire’s substantial position in the tech giant. The company reported earnings per share growth of 19% on a year-over-year basis in its most recent quarter, demonstrating persistent profitability gains even amid a saturated smartphone market.

The real growth engine behind this performance isn’t iPhones—it’s services. Apple’s services business achieved a gross profit margin of 75.4% in fiscal 2025, commanding roughly 26% of the company’s total revenue. This combination is precisely what supports a multi-decade investment thesis. High-margin, recurring revenue streams create the predictability and durability that justify patient capital deployment.

Quarter-over-quarter, Apple’s fiscal Q1 saw revenues expand 16% year-over-year, while earnings per share expanded even faster at 19% growth. This operating leverage—the mathematical relationship where earnings grow faster than revenue—signals strong cost discipline and pricing resilience. As services continue to constitute a larger percentage of Apple’s revenue mix over time, the company’s consolidated gross margin could expand further, creating additional tailwinds for shareholder value.

The Valuation Question: Is Apple Worth the Premium?

At approximately 33 times current earnings, Apple’s valuation already reflects the market’s confidence in sustained services momentum and durable pricing power. The question becomes: is paying a fair-to-premium multiple for a business of this quality justified?

For a company boasting Apple’s fortress balance sheet, ecosystem lock-in, and demonstrated capital allocation discipline, the answer leans toward yes—though not without caveats. The primary risk lies in services revenue decelerating more sharply than expected, or competitive pressures eroding Apple’s pricing advantage over time. Conversely, untapped upside exists if Apple’s hardware refresh accelerates due to artificial intelligence tailwinds, or if the services business itself demonstrates faster-than-anticipated growth.

Greg Abel’s willingness to hold and not sell suggests he sees the risks as manageable and the prospects as compelling. For long-term investors, this perspective carries credibility given Berkshire’s track record and Abel’s emerging leadership philosophy.

What This Means for Long-Term Investors

The message from Greg Abel’s first shareholder letter is clear: Berkshire Hathaway under new leadership remains committed to identifying exceptional businesses and sticking with them through market cycles. For Apple investors, this endorsement provides reassurance that at least one of the world’s most sophisticated capital allocators sees decades of value creation ahead.

The compounding power of a company like Apple—with its fortress economics, talented management, and global reach—shouldn’t be underestimated. If you believe in the business and its leadership, as both Greg Abel and Berkshire Hathaway demonstrably do, the right posture is one of patience, not constant trading. That’s the essence of what Abel’s inaugural letter communicated: in a world obsessed with quarterly results and stock price movements, the real wealth is built by backing genuinely exceptional businesses and letting time do the work.