Warren Buffett just did something he’s avoided for decades. The Oracle of Omaha made a massive bet on Google.
Berkshire Hathaway revealed a US$4.3 billion stake in Alphabet at the end of September, purchasing 17.8 million shares during the third quarter. This investment marks Buffett’s first significant position in Google’s parent company, making Alphabet the conglomerate’s 10th largest holding.
The move shocked investors. Buffett has spent 60 years avoiding technology stocks, preferring railroads, banks, and insurance companies. Yet here he is, weeks before stepping down as CEO, backing one of the world’s most powerful tech giants.
A Surprising Shift in Strategy
The timing couldn’t be more intriguing. Buffett is stepping down as CEO at the end of the year, with longtime lieutenant Greg Abel set to take the reins. This US$4.3 billion position represents either a bold final move or a signal of Berkshire’s evolving investment philosophy under new leadership.
The stock jumped 4% in after-hours trading following the announcement. Investors interpreted the investment as validation of Alphabet’s business model and growth prospects, particularly in artificial intelligence.
Key details of the investment include:
- Position value: US$4.3 billion as of 30 September
- Shares purchased: 17.8 million
- Portfolio ranking: 10th largest US equity holding
- Stake percentage: Approximately 0.31% of outstanding shares
Berkshire Hathaway’s journey to becoming the first non-tech company to hit US$1 trillion in market value made this tech investment even more surprising.
Why Google Caught Buffett’s Eye
Buffett previously admitted that he “blew it” by failing to invest early in Google even though he had insight into its advertising potential. His auto insurance unit Geico was an early customer, paying Google US$10 every time someone clicked on their ads.
“I had seen the product work, and I knew the kind of margins,” Buffett said in 2018. The regret has haunted him for years.
Alphabet shares are up 46% this year, driven by strong demand for artificial intelligence and solid momentum in its cloud business. The company has emerged as a leader among AI hyperscalers, alongside Amazon, Microsoft, and Meta Platforms.
Google’s dominance extends across multiple fronts:
- Search engine market leadership
- Cloud computing growth
- YouTube’s advertising revenue
- AI technology development
- Android operating system
The Mystery Behind the Decision
Nobody knows for certain who made the call to buy Alphabet stock. The purchase was likely made by Berkshire investment managers Todd Combs or Ted Weschler, who have been more active in technology names.
One of them initiated an investment in Amazon back in 2019, and Berkshire still owns US$2.2 billion worth of the e-commerce shares. The lieutenants have proven willing to bet on tech when Buffett wouldn’t.
However, given the size of the position, some analysts believe Buffett himself may have approved or even initiated the purchase. At Berkshire’s 2019 annual meeting, both Buffett and late Vice Chairman Charlie Munger lamented not investing in Google sooner.
Apple Out, Alphabet In
The Alphabet purchase coincides with significant portfolio reshuffling. Berkshire continued paring back its massive Apple stake, trimming the position by another 15% in the quarter to US$60.7 billion.
Buffett went on a head-turning selling spree in Apple in 2024, slashing two-thirds of the shares Berkshire held. Despite the cuts, Apple remains Berkshire’s largest stock holding by far.
The rebalancing reflects Berkshire’s cautious stance. The company has been a net seller of stocks for 12 straight quarters as valuations continued to climb in the tech-driven bull market.
Other portfolio moves include:
- Bank of America: Reduced by 6%
- DR Horton: Position exited completely
- Chubb: Stake increased
- Domino’s Pizza: New position added
What It Means for Investors
Wall Street has been consumed for months with fears that the artificial intelligence boom is actually a bubble about to pop. Berkshire’s investment suggests the legendary value investor sees sustainable value in AI infrastructure companies.
Alphabet trades at more reasonable valuations than many tech peers despite its dominance in search, advertising, and cloud computing. The company also recently declared its first dividend, adding appeal for value-focused investors like Berkshire.
Alphabet Inc (Google) Price Chart
The investment carries broader implications. When Buffett’s seal of approval lands on a stock, other institutional investors typically follow. Technology stocks across global markets could benefit from renewed confidence in the sector’s fundamentals.
Also Read: TPG Telecom Opens $688M Reinvestment Plan Following Historic $3 Billion Capital Return
The Road Ahead
With Buffett due to step down as Berkshire’s CEO by year’s end, investors may not hear directly from the “Oracle of Omaha” on the matter. He recently announced plans to stop writing annual reports and speaking extensively at shareholder meetings.
Greg Abel will inherit a US$1.1 trillion conglomerate with nearly US$280 billion in cash and a portfolio that now includes significant tech exposure. The Alphabet purchase may signal Berkshire’s willingness to expand beyond traditional value stocks under new leadership.
For Alphabet, having Berkshire as a shareholder provides validation of its AI strategy and long-term growth potential. The company continues investing billions in data centres and AI infrastructure while defending its core search and advertising businesses.
Whether this proves to be Buffett’s final masterstroke or Abel’s first major move, one thing is clear: Berkshire Hathaway is betting big on Google’s future.
