Buffett said his holding of about 64 million shares was acquired mostly in the third quarter. That means his company paid about $167.19 on average. IBM rose 0.2 percent to $187.80 at 12:46 p.m. New York time.
Buffett cited IBM's gains in emerging markets and dominance in the information-technology services market as reasons to invest. Revenue from growth markets, such as Brazil, India and China, will make up at least 30 percent of revenue by 2015, IBM has said, up from 21 percent in 2010.
"As you go around the world there's a fair amount of presumption in many places that if you're with IBM that you stick with them, and that if you haven't been with anybody or are developing things that you certainly give them a fair shot at the business," he said.
IBM is also investing in products such as analytics software. The company has said it will generate $100 billion in cash flow between from 2010 to 2015 and return 70 percent of that to shareholders.
Last month, IBM appointed Virginia "Ginni" Rometty, 54, as the first female CEO in the company's 100-year history. She is taking over from Sam Palmisano, who increased earnings by steering the company toward software and services, and disposing some hardware businesses such as PCs.
"She's explained these plans they have for the next five years. I have no reason to be anything other than positive," Buffett said. "And they're batting 1,000 in the last two CEO's they've come up with."
Mike Fay, an IBM spokesman, referred to Buffett's comments on the company's growth plans and said IBM didn't immediately have anything to add.
Buffett drew down Berkshire's cash hoard in the three months ended Sept. 30 as U.S. stocks headed for their biggest quarterly decline since 2008. The chief executive officer invested $23.9 billion in the period as he acquired Lubrizol Corp., took a preferred stake in Bank of America Corp. and broadened the stock portfolio.
Buffett spent $11.4 billion on equities in the nine months ended September, compared with $3.9 billion a year earlier. The stock purchases this year are in addition to the $5 billion Berkshire spent on Bank of America preferred stock and warrants and the takeover of Lubrizol for about $9 billion.
Berkshire had $68.1 billion in stocks at the end of September. That includes investments of non-U.S. companies, including Germany's Munich Re and the U.K.'s Tesco Plc.