Bill Gates' Trust Offloads 17M Microsoft Shares and Over 2.3M Berkshire Hathaway Class B Shares in Q3

The Bill Gates Foundation Trust sold over 2.3 million Berkshire Hathaway Class B shares (NYSE:BRK.B) in Q3, valued at approximately $1.1 billion (£835.4 million).

Additionally, Gates reduced his stake in Microsoft (Nasdaq: MSFT) by 64.9%, or 17 million shares, worth around $8.6 billion (£6.5 billion).

While Gates has been steadily selling Berkshire Hathaway shares since 2024, his substantial Microsoft sale has surprised market participants. This is especially notable given Microsoft's recent strong earnings, with the company's adjusted non-GAAP fiscal Q1 earnings and revenue experiencing year-over-year growth.

Microsoft's Growing Capital Expenditures

Microsoft's stock has experienced volatility following the company's disclosure of increased capital expenditures (capex). During the quarter, capex reached $34.9 billion (£26.5 billion), surpassing earlier guidance of $30 billion (£22.7 billion). The company attributed this to investments in GPUs, CPUs, data centres, and AI infrastructure to support rising demand for Azure and to overhaul its server and networking hardware.

Microsoft has indicated that capex will continue to rise, driven by surging cloud and AI demand, alongside swelling remaining performance obligations (RPO). However, investors are wary, questioning whether AI investments are delivering proportional economic returns amid reports of an AI bubble.

Berkshire Sale Comes Ahead of Buffett's Exit

Berkshire Hathaway's stock has also faced volatility amid Warren Buffett's announcement of his planned retirement by year's end.

While earlier sales of Berkshire shares by Gates were linked to potential tensions in his long-standing friendship with Buffett, the latest sales are more likely related to Buffett's impending departure.

Buffett's decision has impacted investor sentiment, as the so-called 'Buffett premium' — the extra valuation attributed to Berkshire because of Buffett's investment philosophy — appears to be diminishing. Operational pressures across Berkshire's core divisions have also weighed on its stock price.

Gates joined Berkshire Hathaway's board in 2004 and served until 2020. Buffett was a member of the Bill and Melinda Gates Foundation until 2021, shortly after the couple announced their divorce.

In 2006, Buffett pledged to give away 85% of his stake in Berkshire Hathaway to charity, most of which was intended for Gates' foundation. However, in a 2024 interview with The Wall Street Journal, Buffett revealed that donations to Gates' foundation would cease after his passing.

Gates Sells Entire Stake in UPS, Crown Castle

In Q3, Gates did not acquire any new stocks but sold several holdings, including entire positions in United Parcel Service (NYSE: UPS) and Crown Castle (NYSE: CCI).

He also divested from:

• 3.3 million shares of Waste Management Inc (NYSE: WM)
• 3 million shares of Canadian National Railway (NYSE: CNI)
• 1 million shares of Caterpillar (NYSE: CAT)
• 700,000 shares of Walmart (NYSE: WMT)
• 150,000 shares of FedEx (NYSE: FDX)
• 150,000 shares of Kraft Heinz (Nasdaq: KHC)
• 110,000 shares of Waste Connections (NYSE: WCN)
• 110,000 shares of Hormel Foods (NYSE: HRL)

Recent hedge fund activity reveals a broader trend of trimming stakes in technology stocks, particularly in the so-called Magnificent 7, as valuations remain stretched.

Notably, Michael Burry of Big Short fame closed his hedge fund, Scion Asset Management, weeks after warning of an AI bubble and suggesting that sometimes the best move is to stay out of the market entirely. He took significant short positions against AI leaders Nvidia (Nasdaq: NVDA) and Palantir Technologies (Nasdaq: PLTR).

Similarly, Bridgewater Associates founder Ray Dalio has voiced concerns about an AI bubble and emphasised the importance of risk management amid volatile global markets.

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