Greg Abel's Vision for Apple and Berkshire's Core Holdings: A Long-Term Investment Thesis

The investing world has been closely monitoring Berkshire Hathaway since a pivotal transition took place at the start of 2026. Greg Abel, Warren Buffett’s chosen successor, released his maiden shareholder letter as CEO, and the message he delivered proved revealing. Far from signaling dramatic portfolio shifts, Abel’s correspondence emphasized stability and conviction in the conglomerate’s largest positions—a strategic clarity that carries significant implications for investors holding these same securities.

What stood out most wasn’t what Berkshire planned to do next, but rather what it explicitly committed to preserve. Abel indicated that investors should expect only “limited activity” in the company’s most substantial equity positions. This measured approach applies to American Express, Coca-Cola, Moody’s, and perhaps most notably, Apple—companies that represent the bedrock of Berkshire’s equity portfolio and embody decades of compounding potential in Abel’s assessment.

A New Era at Berkshire: How Greg Abel Is Shaping the Investment Philosophy

The transition from Buffett to Greg Abel carries deeper significance than a typical leadership change. In his first communication as chief executive, Abel reinforced a fundamental principle that has defined Berkshire for generations: the power of patient capital deployed in exceptional businesses. The fact that he chose to emphasize “limited activity” in core holdings rather than highlight new acquisitions speaks volumes about his investment philosophy.

Abel’s commentary revealed that Berkshire’s approach to managing its largest stakes will hinge less on valuation fluctuations and more on the intrinsic quality of the underlying businesses. According to his letter, the conglomerate will only make significant portfolio adjustments to its four cornerstone equity holdings if there’s a fundamental deterioration in long-term economic prospects. This represents a philosophical consistency with Buffett’s legacy while also establishing Greg Abel’s own conviction framework.

What makes this approach particularly noteworthy is Abel’s explicit praise for the leadership teams at these four companies. He emphasized that Berkshire has “a high regard for their leaders,” coupling this confidence with the articulated belief that these businesses will “compound over decades.” Coming from Berkshire’s new CEO, this isn’t mere optimism—it’s a strategic declaration of intent.

Apple’s Fundamentals: The Case for Multi-Decade Ownership

Apple, as Berkshire’s largest equity holding, received particular emphasis in Greg Abel’s letter, and the underlying business metrics help explain why. The tech giant has been delivering impressive operational results that justify a long-term holding perspective. In fiscal Q1, Apple’s earnings per share grew 19% year-over-year, demonstrating robust profitability expansion even as the company operates at scale.

The architecture of Apple’s earnings tells a story of durable competitive advantages. The company’s services segment—encompassing App Store, iCloud, Apple Music, and other recurring revenue streams—has become increasingly central to its business model. This segment commanded a gross profit margin of 75.4% in fiscal 2025, a striking figure that underscores the quality of recurring revenue. Accounting for approximately 26% of Apple’s total fiscal 2025 revenue, this high-margin stream provides the exact profile of sustainable cash generation that supports a decades-long investment holding period.

Operating leverage also plays a role in Apple’s financial performance. Fiscal first-quarter sales grew 16% year-over-year, while earnings-per-share growth expanded even faster at 19%. This gap between revenue growth and profit growth indicates that Apple is expanding margins as it scales, a hallmark of a well-managed technology platform.

The Services Engine: Driving Long-Term Value Expansion

The increasing prominence of Apple’s services business deserves particular attention when considering the company’s long-term trajectory. As this high-margin segment grows as a percentage of total revenue, it has the potential to lift Apple’s overall gross margin over time. This dynamic creates a compounding effect: improving unit economics from services can enhance profitability while also providing a buffer against potential hardware cycle volatility.

This is precisely the type of structural improvement that allows experienced investors like Greg Abel and the team at Berkshire to maintain conviction in a holding despite valuation concerns. Rather than viewing Apple as a cyclical hardware manufacturer, the services transition has transformed the company into a recurring-revenue business with consumer lock-in characteristics.

Valuation in Context: Weighing Price Against Quality

Apple currently trades at approximately 33 times earnings, a valuation that unquestionably prices in expectations for sustained services growth and durable pricing power. For some investors, this multiple might seem demanding. However, when viewed through the lens of Berkshire’s capital allocation history and Apple’s demonstrated execution, the question becomes less about whether the valuation is “cheap” and more about whether it’s fair for a business of this caliber.

Apple’s customer loyalty represents a tangible competitive moat. The ecosystem integration—spanning hardware, software, and services—creates switching costs that protect pricing power. Additionally, management’s track record of capital allocation, demonstrated through thoughtful R&D spending and shareholder returns, adds another layer of confidence to long-term ownership.

That said, risks merit acknowledgment. A meaningful deceleration in services revenue growth could pressure the investment thesis. Similarly, unexpected erosion in Apple’s pricing power, perhaps driven by intensifying competition or shifting consumer preferences, would warrant reassessment. These aren’t theoretical concerns; they’re the legitimate guardrails that thoughtful investors maintain alongside conviction in quality businesses.

Counterbalancing these risks are plausible upside scenarios. An artificial intelligence tailwind could accelerate hardware innovation cycles and drive adoption. Alternatively, Apple’s services business could itself accelerate, driven by expanding global reach or new service categories that gain traction in the installed base.

The Bigger Picture: What Greg Abel’s Letter Signals About Berkshire’s Future

Greg Abel’s maiden shareholder letter accomplishes something subtle but powerful: it signals continuity in Berkshire’s value-creation philosophy while establishing his own leadership voice. By emphasizing the exceptional nature of core holdings and the long-term holding horizons appropriate for truly great businesses, Abel reinforces the principles that have guided Berkshire’s success while demonstrating a clear-eyed assessment of which companies merit that level of commitment.

For Apple shareholders, the implications are reassuring. One of the world’s most sophisticated capital allocators—now led by Greg Abel—has determined that Apple warrants not just continued ownership but enthusiastic long-term commitment. This validates the patience required to allow exceptional businesses to compound. In a market often obsessed with quarterly returns, Abel’s emphasis on decades-long time horizons stands as a refreshing reminder that the most durable wealth creation flows from owning quality businesses and granting them time to realize their potential.