When Berkshire Hathaway moves aggressively into three names in a single quarter, allocators pay attention. Greg Abel’s team, per the Q1 2026 13F, built or expanded positions in an airline, a mega-cap platform, and a homebuilder. Patient institutional capital is leaning into cyclicals and cash generators trading below what the underlying earnings power can support. Here is how the trio looks in July, with tool-verified data driving each thesis.
Delta Air Lines: A Cash Machine Absorbing a Fuel Shock
Delta Air Lines (NYSE:DAL | DAL Price Prediction) is the boldest signal in the filing. Berkshire re-entering a legacy carrier is the kind of move that only makes sense if the underlying earnings trajectory has structurally changed. Delta’s numbers say it has.
Q2 2026 delivered adjusted EPS of $1.56 versus a $1.50 consensus, the fifth consecutive EPS beat. Delta produced $1.4 billion in pre-tax profit while absorbing the highest quarterly fuel expense in company history, $4.41 billion at $3.93 per gallon. Premium ticket revenue rose 17%, loyalty revenue jumped 19%, and American Express remuneration hit $2.40 billion, up 16%. Diversified, high-margin revenue streams now account for 61% of the total, which is why Delta absorbed a 77% year-over-year fuel expense increase and still guided FY2026 EPS to $6.50 to $7.50 with roughly 20% earnings growth. Management also announced a 15% dividend increase beginning the September quarter.
Shares traded around $86.19 on July 16, up more than 55% over the past year. The Street is aligned: 96% bullish, with 25 Buy or Strong Buy ratings against a single Sell rating, and an analyst target of $99.56. That is roughly 14x trailing earnings for a business generating record free cash flow at scale.
Risk: Operating margin compressed 4.5 points to 8.8%, and non-fuel unit costs rose 6.8% YoY, above the long-term target. If fuel stays elevated into 2027, the 20% earnings growth story slips.
Alphabet: Cloud Backlog Doubled, Yet the Stock Trades Like Value
Alphabet (NASDAQ:GOOGL) is the AI infrastructure trade Berkshire evidently wants to own. Q1 2026 was a blowout: EPS of $5.11 versus a $2.63 estimate, revenue of $109.90 billion (+21.8% YoY). Google Cloud posted $20.03 billion in revenue, up 63%, and Sundar Pichai flagged that “Google Cloud revenues grew 63% with backlog nearly doubling quarter on quarter to over $460 billion.”
Search remains the cash engine: $60.40 billion in revenue, up 19%. Paid subscriptions crossed 350 million, Gemini processes 16 billion tokens per minute, and Waymo now runs more than 500,000 fully autonomous rides per week. Operating income expanded 30% to $39.70 billion, with an operating margin of 36.1%.
On July 16, shares traded around $373.61, up more than 104% over the trailing year yet still below the 52-week high of $408.37. Analysts sit at $431.91, with 57 Buy or Strong Buy ratings, seven Hold ratings and zero Sell ratings. At a forward P/E near 25 for a business compounding earnings at 82% year over year, the setup is asymmetric.
Risk: FY2026 CapEx guidance of $175 to $185 billion is straining free cash flow, which fell 46.6% YoY in Q1. If AI monetization lags the buildout, that gap widens before it closes.
Lennar: The Contrarian Housing Bet
Lennar (NYSE:LEN) is the deep-value leg. Shares are down more than 17% year to date and more than 20% over the past year, trading at roughly 0.94x book value. Berkshire buying here is a bet that the mortgage-rate freeze on affordability is thawing.
Q2 fiscal 2026 delivered EPS of $1.24 on revenue of $7.94 billion, with gross margin on home sales of 15.6%, up sequentially from the Q1 trough. CEO Stuart Miller framed the margin catalyst directly: “The gap between our current incentive levels of 12.9% and normalized levels of 4% to 6% is narrowing for the first time in three years as the mismatch between higher home prices with higher interest rates and household income is narrowing.” That is the margin recovery catalyst, and base-case modeling puts the stock at $95.50 within a year, a 15.28% return, with a bull case at $113.51.
Operationally, Lennar is running the leanest homebuilder in the market: construction cycle time of 121 days, down from 132, construction costs down 13% over several years, and less than 5% of land on the balance sheet. The company bought back 5 million shares at an average $89.35 for $447 million in Q2. Miller added: “Demand is real, deferred, and building. Lennar is positioned better than at any point in recent history to capture demand as conditions normalize.”
Risk: Analyst sentiment is genuinely mixed: only 11% bullish, 44% bearish, with five Strong Sell ratings. Miller cited “a resurgent inflation reading of 4.2% driven by higher energy prices,” and if rates stay pinned, the incentive-normalization thesis stalls.
What to Watch Next
The through-line: three cyclicals with self-help stories, buying back stock, and generating cash before their end markets fully re-rate. Watch Delta’s Q3 EPS against the $2.00 to $2.50 guide, Alphabet’s next capex commentary, and Lennar’s Q3 gross margin against the ~16% target. If each hits, Berkshire’s Q1 build will look early rather than lucky.
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