Berkshire Hathaway stunned the market this quarter by initiating a multibillion-dollar position in Alphabet just months before Warren Buffett steps down as CEO.
While Berkshire trimmed its long-held Apple stake yet again, it bought almost 18 million Class A shares of Alphabet at just north of $200 per share, now worth over $5.5 billion. Even so, that position represents barely 0.3% ownership in Alphabet, a reminder of the sheer scale of the Google empire.
What makes this move so striking is how sharply it diverges from Berkshire’s broader posture. After a year spent selling stocks, amassing a record pile of Treasuries, and pausing buybacks, Berkshire seemed increasingly cautious about valuations. Yet Alphabet became one of the rare places where the firm put fresh capital to work.
Key Points
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Berkshire bought Alphabet because it saw a rare large-cap bargain at a time when it was otherwise raising cash and trimming positions.
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Alphabet’s outlook improved sharply thanks to a favorable DOJ ruling, faster cloud growth driven by AI, and strengthening search and YouTube performance.
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Combs and Weschler likely viewed Alphabet as a high-quality compounder poised for multi-year earnings growth supported by durable AI tailwinds.
Why Alphabet Looked Risky, Until It Didn’t
Alphabet entered 2025 in a defensive crouch. Search finally faced credible pressure from AI challengers like ChatGPT. Google Cloud still trailed AWS and Azure by a wide margin.
But several developments shifted the narrative. Most notably, a federal court rejected the DOJ’s proposal to force Google to sell Chrome, instead opting for a narrower remedy involving exclusive search deals. For a company staring down a potential structural amputation, this outcome was practically a relief rally waiting to happen.
Google Cloud delivered 34% year-over-year growth in Q3. What investors rarely appreciate is that a rising share of this growth is now driven by AI-intensive workloads, which command higher margins and lock customers deeper into Google’s ecosystem.
Gemini, after a bumpy debut, is becoming less a standalone chatbot and more a connective tissue across search, ads, and enterprise products.
And YouTube, long treated as a mature segment, is benefiting from AI-enhanced recommendation engines that have improved watch-time efficiency and nudged CPMs upward, outpacing TikTok’s most recent quarter.
Why Berkshire Stepped In Now
Analysts expect Alphabet’s revenue and EPS to compound at roughly 13% and 17% annually through 2027 as ads stabilize, Cloud scales, and AI becomes increasingly monetizable.
At nearly 30x next year’s earnings, Alphabet isn’t cheap, but it is meaningfully discounted relative to other mega-cap AI beneficiaries, especially those without Alphabet’s net cash position or data advantage.
Buffett hasn’t said anything publicly about the purchase, and based on historical patterns, it’s almost certain that Todd Combs and Ted Weschler drove the initial idea. They have long been the ones nudging Berkshire into high-quality tech compounders.
Buffett probably approved the final allocation not because he suddenly turned into an AI bull, but because Alphabet’s fundamentals were improving at a moment when the market wasn’t fully pricing in the shift.
The real story is simpler in that Alphabet’s underlying engines, search, YouTube, and Cloud are strengthening, not weakening, and AI is amplifying that advantage rather than eroding it. Berkshire saw a durable compounder at a reasonable multiple with new growth catalysts that investors were slow to acknowledge.
And for the last major investment approved under Buffett’s tenure, it’s an appropriately rational, long-term call, exactly the kind of move Berkshire would want to be remembered for.