Is Warren Buffett a Supporter of Cloud Computing?

Is Warren Buffett a Supporter of Cloud Computing?

“It’s only when the tide goes out that you learn who’s been swimming naked.”
– Warren Buffett, legendary investor and one of the richest men in the world.

In the wake of the sub-prime mortgage crisis and the collapse of Bear Stearns and Lehman Brothers, Warren Buffett’s quote seems especially relevant. While this clearly demonstrates his aversion to risk, his recent buy may possibly indicate a support for cloud computing.

In a world full of corrupt leaders and avaricious businessmen, Warren Buffett is a role model worth looking up to. In spite of a fortune that dwarfs the GDP of several nations, he leads a life of simplicity eschewing the typical luxuries of the rich boy club. Furthermore, he has pledged to give away 95% of his fortune to charity. What’s even more impressive is that this charitable donation will not be to an organization that bears his name but to the Bill and Melinda Gates Foundation, founded by his good friend and fellow billionaire Bill Gates. And now, with the Giving Pledge, he is encouraging other billionaires to follow suit in pledging their fortunes to charity.

For several decades now, Warren Buffett has been eulogized as the “Oracle of Omaha” – the smartest investor in the world. Not surprisingly, his investments are watched with keen interest by investors worldwide, both Wall Street firms and the common man. Buffett’s investments follow a simple philosophy – he buys stock in an industry only when he understands it. And he buys for the long term. As he said, his “favorite holding period is forever.” That is why, when tech stocks ruled the market, he kept away because he didn’t understand the industry. Considering what happened next with the dotcom bubble, it seems a very intelligent thing in retrospect.

However, a recent development seems to show a change in Buffett’s aversion to the tech industry. While Buffett has, over the years, put his money in traditional industries like insurance (Swiss Re), financial services (Goldman Sachs), railroads (Burlington Northern Santa Fe) and Coca Cola, his recent foray into the tech world with $10.7 billion worth of IBM stock has come as a surprise.

Rebecca Lipman, writing on the NASDAQ Community website, has postulated that Buffett’s investment may be influenced by the company’s cloud computing initiatives (See: Tech Ideas: Buffett Shows How to Buy Into Cloud Computing, Cheaply. She has also mentioned how the ISE Cloud Computing Index, of which IBM is a part, has risen 277% over the past three years, versus 11% for the S&P 500. I had earlier covered this area of stock appreciation (See: Breakout Quarter for Cloud Computing Stocks) as well as possible concerns on valuations (See: Are Cloud Computing Stocks Overvalued?) in previous articles.

Personally, I believe Buffett’s buy has to do with more than cloud computing, although IBM does have big plans in this field (See: IBM Expects To Generate $7 billion In Cloud Computing Revenues By 2015: CEO).
Buffett is buying into a company that meets his criteria of stable business with a consistent record; considering that Big Blue had almost $100 billion in revenues last year and the cloud is expected to generate only (relatively speaking) $7 billion by 2015, Buffett is buying more than innovations in the cloud.

By Sourya Biswas

sourya

Sourya Biswas is a former risk analyst who has worked with several financial organizations of international repute, besides being a freelance journalist with several articles published online. After 6 years of work, he has decided to pursue further studies at the University of Notre Dame, where he has completed his MBA. He holds a Bachelors in Engineering from the Indian Institute of Information Technology. He is also a member of high-IQ organizations Mensa and Triple Nine Society and has been a prolific writer to CloudTweaks over the years... http://www.cloudtweaks.com/author/sourya/

Sorry, comments are closed for this post.


CloudTweaks Sponsors - Find out more!

Popular

Top Viral Impact

The Lighter Side Of The Cloud – Holiday Photos

The Lighter Side Of The Cloud – Holiday Photos

The Lighter Side Of The Cloud – Holiday Photos Enjoy our weekly comics provided by our talented cartoonists. By David Fletcher About Latest Posts souryaSourya Biswas is a former risk analyst who has worked with several financial organizations of international repute, besides being a freelance journalist with several articles published online. After 6 years of…

Cloud Infographic – The Internet Of Things In 2020

Cloud Infographic – The Internet Of Things In 2020

Cloud Infographic –  The Internet Of Things In 2020 The growing interest in the Internet of Things is amongst us and there is much discussion. Attached is an archived but still relevant infographic by Intel which has produced a memorizing snapshot at how the number of connected devices have exploded since the birth of the…

Using Big Data To Make Cities Smarter

Using Big Data To Make Cities Smarter

Using Big Data To Make Cities Smarter The city of the future is impeccably documented. Sensors are used to measure air quality, traffic patterns, and crowd movement. Emerging neighborhoods are quickly recognized, public safety threats are found via social networks, and emergencies are dealt with quicklier. Crowdsourcing reduces commuting times, provides people with better transportation…

Big Data Analytics Adoption

Big Data Analytics Adoption

Big Data Analytics Adoption Big Data is an emerging phenomenon. Nowadays, many organizations have adopted information technology (IT) and information systems (IS) in business to handle huge amounts of data and gain better insights into their business. Many scholars believe that Business Intelligence (BI), solutions with Analytics capabilities, offer benefits to companies to achieve competitive…


Established in 2009, CloudTweaks is recognized as one of the leading influencers in cloud computing, big data and internet of things (IoT) information. Our goal is to continue to build our growing information portal, by providing the best in-depth articles, interviews, event listings, whitepapers, infographics and much more.

You can help continue to support our community by social sharing, sponsoring, partnering or contributing to this great educational resource.

Contact

CloudTweaks Media
Phone: 1 (212) 763-0021
contact@cloudtweaks.com

Join our newsletter