‘Baby Berkshire’ Portfolio: 10 Best AI Stocks to Buy According to Warren Buffett Disciple Tom Gayner

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#4 Microsoft Corporation (NASDAQ:MSFT)

Markel Stake as of Q3: $275.8 Million

Markel held 537,630 shares of Microsoft (NASDAQ:MSFT) at the end of September 2026, which is 2.15% of its reported portfolio. The portfolio data shows no change to the position in the quarter. Investors are nervous about whether Microsoft can keep growing, and we asked if its AI spending is finally paying off. Read the full analysis here.

Investors are nervous about how much Microsoft is spending on AI. Bulls say the shares can keep rising even if the AI hype slows, because most of Microsoft’s business has nothing to do with AI. Companies around the world already run on Microsoft 365, Windows, and Azure, and switching away is slow and costly. Microsoft sells its AI tools, including Copilot and its Foundry platform, directly to those same customers, so it does not need to find new buyers. If AI demand cools, the software subscriptions and the cloud business keep paying.

Microsoft is also the one big AI spender that still generates positive free cash flow. Other large tech companies, including Alphabet and Amazon, reported negative free cash flow in their latest quarters. Management expects Microsoft to stay free cash flow positive in fiscal 2027. That gives it more room to keep building data centers without borrowing as heavily as its rivals.

#3 Analog Devices, Inc. (NASDAQ:ADI)

Markel Stake as of Q3: $396.6 Million

Analog Devices (NASDAQ:ADI) designs analog and mixed-signal chips used in industrial machines, cars, and communications equipment. Markel held 999,671 shares at the end of September 2026, or 3.09% of its reported portfolio. The portfolio data shows no change to the position in the quarter. Madison Investments named Analog Devices one of the top five contributors in its first-quarter 2026 letter for the Madison Large Cap Fund. Open the letter coverage here.

Analog Devices designs analog and mixed-signal chips used in industrial machines, cars, and communications equipment. Markel held 999,671 shares at the end of September 2026, or 3.09% of its reported portfolio. The portfolio data shows no change to the position in the quarter.

Analog Devices shares are down about 10% over the past month as worries about AI spending hit chip stocks. Bank of America in October said the analog chip industry is only about a year into an upcycle that could run through 2027, with industrial and car customers showing the strongest demand. It named Analog Devices, STMicroelectronics, and Texas Instruments as the strongest performers in the group.

Bank of America argued that if AI spending slows while demand stays strong, the spending cycle could last longer, and chip stocks could earn higher valuations.

#2 Amazon.com, Inc. (NASDAQ:AMZN)

Markel Stake as of Q3: $506.0 Million

Markel held 2,030,760 shares of Amazon (NASDAQ:AMZN) at the end of September 2026, or 3.94% of its reported portfolio. The portfolio data shows no change to the position in the quarter. We looked at whether Amazon is a good AI stock for long-term investors. Read our answer here.

Bulls say Amazon shares can keep rising in the age of AI because Amazon Web Services, the company’s cloud business, already runs the computer systems of a huge number of companies. Those companies keep their data and apps on AWS, and moving them to another cloud is slow and expensive. AI projects need storage, databases, networking, and regular computing, and most customers want to run AI next to the data they already have on AWS. Amazon also designs its own chips, Trainium for AI and Graviton for general computing, which lowers its cost of running AI and gives customers a cheaper option. The company plans to sell Trainium outside AWS starting in late 2027.

AI is also only one of Amazon’s businesses. Amazon has an online store with a delivery network that rivals struggle to copy, a Prime membership that keeps shoppers coming back, and an advertising business that sells ads to the sellers on its site. If AI spending cools, those businesses keep making money.

The main risk is the cost of building data centers. That spending is pushing free cash flow down, and analysts expect it to stay negative through 2027. If AI demand slows, Amazon would be left with expensive capacity it does not need.

#1 Alphabet Inc. (NASDAQ:GOOG, NASDAQ:GOOGL)

Markel Stake as of Q3: $937.0 Million (Class C) and $178.9 Million (Class A)

Markel held 2,749,860 Class C shares of Alphabet (NASDAQ:GOOG) at the end of September 2026, which is 7.30% of its reported portfolio. It also held 519,975 Class A shares (NASDAQ:GOOGL), or 1.39% of the portfolio, after trimming that position by 9.10% in the quarter. The Class C position did not change. Investors still like Alphabet despite AI search threats, and we explain why. Click to read why.

The fact that Gayner was holding onto Alphabet (NASDAQ:GOOGL) as a major position might sound surprising to many. Alphabet shares are in the spotlight as AI remains the biggest threat to search, the bread and butter of the company’s business. Bulls argue the threat is smaller than it looks because Alphabet builds AI itself and sells it to other companies. The company has its own AI models and chips, a large cloud business, and YouTube, so search is only one of several businesses that make money from the AI boom. In its recently reported quarterly results, Alphabet said revenue grew 25% and Google Cloud revenue grew 103% from the same quarter a year ago, as demand for AI infrastructure picked up.

Bulls also point to the valuation. After the recent pullback in the shares, Alphabet trades at about 14 times forward earnings, well below its own five-year average of about 23 times. Alphabet also has fans among well-known investors, and you can see why Cathie Wood and Stanley Druckenmiller agree on Amazon and Alphabet.

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