Buffett said he was convinced by IBM's long-term roadmap and by its entrenched position with major businesses -- part of the durable competitive advantage that he looks for when investing in a company.
"I don't know of any large company that really has been as specific on what they intend to do and how they intend to do it as IBM," Buffett told CNBC in an interview on Monday.
The move puts Buffett's money squarely in the heart of the technology industry, a sector he has steadfastly avoided on the grounds he simply did not understand it.
One long-term Berkshire investor said the investment was a global play.
"More confirm(ation) that he sees international as more important," said Michael Yoshikami, chief executive of wealth manager YCMNET Advisers, which manages about $1 billion and holds Berkshire shares.
Buffett said he had bought about 64 million shares of IBM, paying $10.7 billion. Berkshire started buying the shares in March, with a goal of building a $10 billion position, he said.
Buffett said IBM did not know that he was building a stake and that the company was finding out about his investment for the first time as he disclosed it on television.
An IBM spokesman declined to comment.
Buffett said he has always looked at IBM's annual report -- his preferred method of identifying companies to invest in -- but this year "I read it through a different lens."
He said follow-on conversations with various technology executives throughout the Berkshire conglomerate convinced him to start building the stake.
Berkshire is due to make a quarterly report of its equity holdings Monday night. Though it started buying IBM shares in March, Buffett's comments suggested Berkshire did not cross reporting thresholds on the investment until the third quarter, which let him keep the stake secret until Monday.
According to Thomson Reuters data, a 5.5 percent position in IBM would tie Buffett with State Street Global Advisors for the largest stake in the company.
IBM shares rose nearly 1 percent in premarket trading.
Buffett, known as one of history's great value investors, appears to have gotten into IBM late in the game.
By early March, when he started buying the stock, the shares had risen more than 25 percent from their low of six months earlier. Even the stock's lowest point during the third quarter, when Buffett built the rest of his stake, was one of its highest levels ever.
At a Friday close of $187.38, the stock is nearing analysts' median price target of $200, according to Thomson Reuters data.
NOT BUYING EUROPE
One place where Buffett is not investing is European banks.
Buffett, who put $5 billion into Bank of America Corp earlier this year, comes up whenever there is talk of a large European bank needing to raise capital, particularly in the current environment of writedowns on sovereign debt.
But he told CNBC that he would need to understand European banks better before investing in them, and that he has not yet seen an investment opportunity there in which he wants to take part.
The "Oracle of Omaha" and Berkshire Hathaway chief executive said he expects Europe's economy to show improvement 10 years from now but that getting there will be difficult.
(Reporting by Ben Berkowitz in New York, additional reporting by Nicola Leske in New York and Jim Finkle in Boston; Editing by Derek Caney, Dave Zimmerman and John Wallace)