Warren Buffett built Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) into the empire that it is today. While he's starting to step away from the company completely, the mark he has left on the investing practices and portfolio of the businesses will last for generations.

Buffett made investments in countless stocks, but some of the biggest are Apple (NASDAQ: AAPL) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Right now, Apple is the conglomerate's biggest holding, accounting for about $66 billion in invested assets. Between both share classes of Alphabet stock, it's Berkshire's third-largest holding, making up about $37.8 billion in assets.

These are two high-conviction investments for Berkshire, but if it had to start from scratch, which one would it choose today? Let's find out.

Image source: The Motley Fool.

How much is AI a factor?

The biggest question many investors must answer right now is: How much of an AI investor do you want to be? AI is shaping the stock market right now due to the sheer volume of money being invested in the technology. While there are countless people who are bullish on the prospects of AI and what it can do, there are still many who are skeptical. Depending on what side of the coin you fall on, Apple or Alphabet may be a better stock pick.

There are very few companies that can match the level of investment Alphabet has in AI. It has completely reshaped its company around AI, and nearly every new feature it rolls out is AI-focused. It transformed its Google Search platform to include AI overviews, is heavily investing in developing its Gemini family of large language models, and is spending hundreds of billions of dollars on data centers to increase capacity for internal use as well as for external use that can be rented out via Google Cloud.

Alphabet is absolutely an AI investment, and if AI blows up in a good way, it will be slated to deliver monster returns on its investment. On the flip side, if AI blows up in a bad way and doesn't live up to the hype, Alphabet's investment will be a waste of money and could plunge the stock significantly from its current levels.

Apple is not taking the same AI approach. Apple has had a very measured rollout of its AI products, and really hasn't done a ton to implement advanced AI technology. It just rolled out a new Siri upgrade, integrating new AI technology.

However, there are still countless AI features that can be accessed via various AI apps that Apple has chosen not to invest in, and it may have missed a major opportunity to create an AI subscription. Apple may not always be first to the party, but it tends to bring a very refined version of its product when it does. A major AI feature set may be coming, but investors are still waiting to see it now.

With Apple's current AI positioning, if AI goes bust soon, it won't really have lost out on much. If it takes off, Apple could be left in the dust.

Buffett is a value investor

The two companies' future with AI integration is up in the air, but one thing that's not up for debate is their price tags.

Buffett is a famed value investor and doesn't like to invest in stocks that are too expensive. However, he bends his own rules sometimes; Apple is one of the more expensive stocks in the market. This is likely because Apple has become somewhat of a haven for investors who want to avoid investing in AI-focused businesses, but it may have reached a level where it's priced too highly.

To value these two, I'm going to use operating income, as Alphabet's price-to-earnings ratio is likely skewed due to a huge gain on investment. From this standpoint, Apple is more expensive.

AAPL Operating PE Ratio data by YCharts

So, Alphabet may be a better bargain right now, but is it the better buy? From my perspective, yes. I think Apple is in a precarious spot, with it missing out on the early phase of AI, and this could be a problem moving forward. Alphabet is well positioned to benefit from AI, and, with it priced cheaply, it's the better buy.

Keithen Drury has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.

Investors have survived September, the historically worst month of the year for stock market returns. Outside of February (which has an average return that's just barely negative), September is the only month to average a negative return for the S&P 500 (SNPINDEX: ^GSPC). The S&P 500 was actually positive for September this year, although it wasn't a very large positive gain -- less than 1%. However, that primes the market for October.

The S&P 500 has averaged about a 0.9% positive return in October, making it one of the better months (although not as good as November or December). I think there's a huge opportunity coming in October, and it could send the market skyrocketing.

Image source: Getty Images.

October has some major catalysts coming

October is the start of the fourth quarter, which means companies will start to report their third-quarter results. There are some highly anticipated Q3 earnings reports coming out soon, including many of the AI hyperscalers. We'll get updated on how businesses like Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), and Microsoft (NASDAQ: MSFT) are doing in the second half of the month, and what they say could shape how the market performs through the end of 2026.

These three tech megacaps are spending hundreds of billions of dollars to build new AI computing capacity in data centers. So far, the growth rates their respective cloud computing businesses have put up have made these investments worth it. This trio may decide to use their next earnings reports to reveal 2027 capital expenditure guidance, which could cause the markets to decline or soar based on the extent to which these three are planning on spending.

It's already widely assumed that these three will increase their capital expenditures in 2027, but the question remains as to how much. I think they will make hefty hikes to their capex budgets, but that they will justify that spending by reporting further massive revenue growth from their cloud computing divisions.

Take Alphabet's Google Cloud, for example. In Q2, its revenue rose 82% year over year, and it delivered a 36% operating margin. That's an incredible business, and if Alphabet has customer demand for more capacity (which it does), it should be commended for heavily investing in this business unit. I expect Amazon and Microsoft to say the same thing, which could send their shares skyrocketing. This would also have positive implications for chip providers like Nvidia, Taiwan Semiconductor Manufacturing, and Broadcom, which also make up a hefty portion of the value of the stock market.

If the giant tech companies that account for more than a third of the value of the S&P 500 perform well, they should pull the rest of the market up with them and make October 2026 a fantastic month on Wall Street.

Keithen Drury has positions in Alphabet, Amazon, Broadcom, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Amazon, Broadcom, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.