Alphabet rallies after Berkshire reveals stake. Why Buffett’s firm likely bought it
Warren Buffett and Greg Abel cover the Berkshire Hathaway Annual Shareholder Meeting on May 3, 2025 in Omaha, Nebraska.
David A. Grogen | CNBC
Alphabet Stocks jump on Monday after Warren Buffett Berkshire Hathaway It revealed a new stake in Google’s parent company, making it one of the conglomerate’s most significant technology bets in recent years.
Alphabet shares rose 5.5% in morning trading, offsetting some weakness in most tech stocks to start the week.
Quarterly 13F filings showed Berkshire owned Alphabet worth roughly $4.3 billion as of Sept. 30, making it the company’s 10th-largest holder of stock. The move surprised many Buffett watchers, given the billionaire’s decades-long hesitancy toward fast-growing technology companies. Buffett has always viewed Apple, Berkshire’s largest holding, as a consumer products company.
The Alphabet investment likely came from Todd Combs or Ted Weschler, one of Berkshire’s two lieutenants who increasingly influence his $300 billion stock portfolio. Its size suggests it has the approval of Buffett, who will likely step down as CEO at the end of this year. The duo was responsible for many of Berkshire’s technology-focused investments, including the Amazon stake launched in 2019. Today, Berkshire still owns Amazon, worth $2.2 billion.
Alphabet has been one of the stock market’s biggest gainers this year, rising 46% as investors reward its accelerating AI push and soaring cloud profitability. Revenue growth from Google Cloud, once a margin drain, has turned into a key earnings driver.
Changing of the guard?
Bill Stone, chief investment officer of Glenview Trust Company, said Alphabet’s acquisition could reflect a broader approach to technology investing as leadership transitions to the next generation.
“Perhaps the Alphabet acquisition signals that the circle of competence is expanding into technology,” Stone said.
Longtime lieutenant Greg Abel is set to take the reins for the 95-year-old Buffett in January. The Oracle of Omaha will remain chairman of the board.
Despite a spectacular rally in 2025, Alphabet’s valuation remains lower than most of its AI-powered megacap peers. The stock trades at 25.5 times next year’s earnings Microsoft at 32.0, broadcom at 50.8 and Nvidia It’s at 41.9, according to FactSet.
This relative discount, combined with Alphabet’s massive cash flow and dominant market position, may have made the shares particularly attractive to Buffett’s team.
Alphabet from year to date
Buffett admitted missing out on Google was one of his biggest investment mistakes. He had a front-row seat: Geico, Berkshire’s auto insurance unit, was one of Google’s first big advertisers. In the early days of online marketing, the company paid about $10 each time a user clicked on one of its search ads.
“I had seen the product work and knew what kind of margins there were [they had]“I didn’t know enough about technology to know if that was really what was going to stop competitive racing,” Buffett said in 2018.
