Warren Buffett loads up on companies that manage internet infrastructure.

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In an intriguing move that signals where one of the world’s most respected investors sees value, Warren Buffett has significantly increased his stakes in companies pivotal to the internet’s backbone. This isn’t just about investing in tech; it’s about betting on the infrastructure that keeps our digital world running.

Buffett’s investment vehicle, Berkshire Hathaway, has recently bolstered its holdings in VeriSign, a company that manages the registry services for internet domains like .com and .net. VeriSign operates crucial internet infrastructure, including two of the 13 global internet root servers, which are essential for the functioning of the entire internet. This move by Buffett, who is known for his cautious approach to tech investments, suggests a belief in the enduring value of internet infrastructure, even amidst market volatility.

Recent reports indicate that Berkshire Hathaway now owns approximately 13% of VeriSign, with Buffett’s firm purchasing around $4 million worth of shares in the last few days of 2024, showcasing his confidence in this sector. This investment comes at a time when the demand for stable, secure internet infrastructure is soaring, driven by the exponential growth in data consumption, the rise of cloud services, and the increasing reliance on digital connectivity for business, education, and entertainment.

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The decision to invest in VeriSign is particularly telling because it’s not about the flashy side of tech like social media or consumer electronics but rather the less glamorous yet indispensable parts of the internet ecosystem. VeriSign’s business model is based on a high margin, with nearly 50% net income margins and consistent earnings growth, which aligns with Buffett’s value investment philosophy.

This investment also highlights Buffett’s recognition of the strategic importance of internet infrastructure in a world where digital transformation is accelerating. VeriSign’s control over domain names gives it a unique market position with significant barriers to entry, essentially making it a ‘landlord’ of the internet. This role ensures a steady revenue stream from domain registrations and renewals, with little need for capital expenditure, making it a perfect fit for Buffett’s investment criteria.

Moreover, this move by Buffett might be indicative of broader trends in the investment world, where there’s a shift towards companies that provide the backbone for digital services rather than those that simply deliver them. With the global internet economy expected to grow, companies like VeriSign are poised to benefit from this expansion, as every new digital venture or business requires domain services.

The implications for investors are clear: Buffett’s investment choices often presage shifts in market sentiment or economic trends. His move into internet infrastructure could signal to other investors that there are still solid, under-the-radar opportunities in tech, especially in areas that support the digital economy’s foundational elements.

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As we see more of our lives and economies moving online, the infrastructure that supports this digital migration will only become more critical. Buffett’s recent investments in companies like VeriSign might be his way of saying that the future of the internet isn’t just in the content or services but in the very infrastructure that makes it all possible.




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