The Gates Foundation's $37 Billion Strategic Pivot Away From Tech: Why 60% Now Sits in Non-Tech Holdings

A Billionaire’s Portfolio Shift: Breaking Free From Pure Technology Exposure

When Bill Gates amassed his centibillionaire status through Microsoft during the personal computing boom of the 1980s and 1990s, few expected his foundation to maintain such heavy tech weighting. Yet today, the picture has fundamentally changed. With a net worth hovering around $100 billion despite Microsoft’s sixfold value increase since 1999, Gates has redirected his philanthropic vehicle toward a distinctly different investment thesis. The foundation announced plans to distribute 99% of remaining wealth over the next 20 years, signaling a major reorientation in how its trust manages capital allocation.

The most striking development emerged recently when investment managers liquidated roughly two-thirds of the foundation’s Microsoft holdings. This decisive move transformed the portfolio’s composition dramatically—now approximately 60% of the trust’s $37 billion sits concentrated in three predominantly non-tech enterprises. The strategic rationale becomes clearer when examining which companies now dominate the foundation’s holdings and why their business models appeal to sophisticated capital allocators.

The Warren Buffett Influence: Berkshire Hathaway’s 29.3% Dominance

Berkshire Hathaway represents the single largest position, commanding 29.3% of portfolio value. This concentration reflects Warren Buffett’s ongoing annual donations of Class B shares to the foundation—a practice that underscores his role as a longtime major donor. In June alone, Buffett contributed just over 9.4 million shares to the cause, continuing a pattern that has meaningfully shaped the trust’s investment composition.

The conglomerate’s 2025 performance validates this weighting. Insurance operations generated particularly robust third-quarter results, with underwriting earnings surging to $3.2 billion compared to $1 billion in the same period last year—more than compensating for earlier setbacks from California wildfires. Berkshire’s expansive investment portfolio continues generating steady returns, though Buffett’s team has found acquisition opportunities scarce amid the company’s swelling cash reserves.

Currently trading at approximately 1.55 times book value—elevated versus historical averages but down from early 2025 peaks—the stock now approaches fair valuation. Recent retirement announcements have tempered investor enthusiasm, creating a more reasonable entry point relative to the underlying assets and insurance operations that drive core profitability.

The Waste Hauling Moat: Waste Management’s 17.1% Position

Waste Management has maintained its spot as one of the oldest holdings within the Gates trust, and rightfully so. This enterprise operates within a recession-resistant sector defended by formidable competitive advantages that few investors fully appreciate. The company’s collection network scales efficiently through size advantages, but the real fortress emerges from its dominant landfill ownership—262 active facilities that create nearly insurmountable barriers for competitors. Regulatory hurdles make new landfill construction prohibitively expensive, granting pricing power that the company deploys consistently year after year.

Last quarter’s adjusted operating margin reached 32%, demonstrating substantial room for expansion as the business exercises its pricing advantage and captures additional scale. A significant development involves the Stericycle acquisition, rebranded as WM Health Solutions, which now accounts for less than 10% of revenue but promises acceleration. Management identifies enormous potential in medical waste disposal over the coming decade, driven by America’s aging demographic profile and corresponding healthcare waste generation increases.

Trading at approximately 15 times forward EBITDA, the valuation appears reasonable. The combination of steady waste-hauling growth plus emerging tailwinds from Health Solutions expansion positions the stock for continued appreciation, explaining why the trust has rarely divested positions despite substantial historical gains over 25 years.

The Railroad Foundation: Canadian National Railway’s 13.6% Stake

Canadian National Railway connects eastern and western Canada with American Midwest and Gulf Coast markets, anchoring the third major position at 13.6% of the portfolio. Railroads persist as economically superior freight transportation—superior fuel efficiency and massive capacity advantages over trucking make them the logical choice for long-distance commerce, despite operating as a notoriously slow-growth sector.

The genuine advantage lies in entry barriers so prohibitive that new competitors cannot realistically emerge. Building sufficient scale through thousands of freight contracts demands capital investments and operational expertise beyond reach for most entrants. Consequently, the industry consolidated, allowing survivors like Canadian National to raise prices systematically while expanding contract volume. Operating margins reached 38.6% last quarter, reflecting this pricing discipline applied amid volume growth.

Tariff concerns triggered worry that international Canada-to-U.S. freight volumes would contract substantially. While metals, minerals, and forest products did decline, petroleum, chemicals, grain, coal, and fertilizer categories offset these losses. Management achieved the impressive feat of growing operating results while reducing capital expenditures, driving free cash flow growth 14% higher through nine months. These efficiency gains fund shareholder distributions via dividends and buybacks that support mid-single-digit earnings-per-share expansion.

With enterprise value near 12 times EBITDA expectations—meaningfully discounted versus the broader railroad peer group trading around 14 times—the valuation reflects significant value. This pricing advantage, combined with structural protections inherent to the business model, clarifies the Gates Foundation’s continued conviction in maintaining substantial exposure.

The Bottom Line: Value Investing at Scale

The Gates Foundation’s portfolio construction reveals a deliberate strategy emphasizing recession-resistant businesses with durable competitive advantages and predictable cash generation. Rather than concentrating wealth in high-growth technology equities, the trust has methodically built positions in stable, mature enterprises generating reliable returns. Each holding—whether insurance, waste management, or railroads—operates within sectors where scale, regulation, or network effects create defensibility that supports consistent price increases over time. For an institution committed to deploying billions annually for global impact, such defensive characteristics provide reassurance that the underlying capital base will sustain indefinitely.