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Shares of legacy technology giant HP Inc. surged Thursday morning after legendary investor Warren Buffett’s Berkshire Hathaway disclosed the purchase of more than 104 million shares this month—becoming HP’s largest shareholder and marking the storied conglomerate’s latest investment in a crop of legacy stocks.

Key Facts

HP shares skyrocketed as much as 18% Thursday by 10:30 a.m. ET to more than $41, the stock’s highest level since its split from enterprise-focused segment Hewlett Packard Enterprise in 2015.

Fueling the morning boost, Berkshire disclosed in a series of regulatory filings Wednesday evening that it holds nearly 121 million HP shares—a roughly 11.5% stake worth about $4.4 billion at the time and $5 billion after the Thursday surge.

According to the filings, Berkshire, through various subsidiaries, held a more than 10% stake in the firm on Friday and piled on to its investment every day this week, buying 11.1 million shares for about $398.5 million.

Shares of Berkshire, which did not immediately respond to Forbes’ request for comment, ticked down 0.5% Thursday to $514,545; they’re up 13% this year, compared to a 6.6% loss for the S&P 500 and a 6% gain for HP.

Key Background

Berkshire’s cash pile swelled to a record high last year, and the investment firm has been on a massive buying spree this year as the market struggles in the face of rising interest rates and geopolitical tensions. Last month alone, Berkshire announced it would buy insurance company Alleghany for $11.6 billion and invested nearly $1 billion in oil giant Occidental Petroleum, the best-performing stock in the S&P last quarter. Its biggest holdings include Apple, American Express, Coca Cola and Bank of America.

Chief Critic

On Thursday, Morgan Stanley analyst Erik Woodring downgraded HP shares and lowered his price target to $31 from $34, implying nearly 25% downside from current levels. Woodring said the firm’s near-term prospects were uncertain given demand for personal computers that appears to be “deteriorating.” He predicts the lackluster demand should ultimately slow HP’s sales growth.

Big Number

$63.5 billion. That’s how much revenue HP posted in its latest fiscal year, with nearly 63% coming from the sale of computers.

Further Reading

Stocks Just Posted Worst Quarter Since Covid Market Crash—But Buffett’s New Favorite Sector Logged ‘Meteoric Ascent’ (Forbes)

Source: Forbes

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