Warren Buffett ahead of Berkshire Hathaway’s annual shareholder meeting to be held in Omaha, Nebraska in 2023.
David A. Grogan | CNBC
alphabet Stocks soared on Monday after Warren Buffett’s comments. Berkshire Hathaway has revealed a new investment in Google’s parent company, marking one of the conglomerate’s most significant technology bets in years.
Alphabet shares rose 3.1%, countering weakness in most technology stocks earlier in the week.
Berkshire held about $4.3 billion worth of Alphabet stock as of Sept. 30, making it the company’s 10th largest holding, according to its quarterly 13F filings. The move surprised many Buffett watchers, given the billionaire’s decades-long reluctance toward high-growth technology companies. Buffett has always viewed Apple, Berkshire’s largest holding company, as a consumer products company.
The investment in Alphabet appears to be the work of one of his two lieutenants, Todd Combs or Ted Weschler, who have increasing influence over Berkshire’s $300 billion stock portfolio. Its size suggests it likely benefited from Buffett, who will step down as CEO at the end of this year. Both have been responsible for many of Berkshire’s tech-oriented investments. Amazon Berkshire still owns $2.2 billion worth of Amazon.
Alphabet has been the stock market’s biggest winner this year, rising 46% as investors reward its accelerated push into artificial intelligence and rapidly increasing cloud profitability. Google Cloud revenue growth, once a drag on profits, is now a key revenue driver.
Changing of the guard?
Bill Stone, chief investment officer at Glenview Trust Company, said the Alphabet acquisition could reflect a broader approach to technology investing as management transitions into the next generation.
“Perhaps the Alphabet acquisition signals a widening circle of technology capabilities,” Stone said.
Greg Abel, a longtime aide, is scheduled to succeed the 95-year-old Buffett in January. Oracle of Omaha will remain chairman of the board.
Despite the impressive rally in 2025, Alphabet’s valuation remains lower than many of its AI-driven megacap peers. The stock trades at 26.9 times next year’s P/E. microsoft At 31.8, broadcom at 40.7, and Nvidia 31.8 according to FactSet.
That relative discount, along with Alphabet’s massive cash flow and dominant market position, may have made the stock particularly attractive to Buffett’s team.
“We believe Berkshire is likely to feel more comfortable investing in GOOG than other tech businesses, given the core business’ strong free cash flow potential and attractive valuation of approximately 22x 2027 EPS on a healthy top-line growth trajectory,” CFRA Alphabet analyst Angelo Gino said in a note to clients.
Alphabet from the beginning of the year to the present
Buffett admitted that missing out on Google was one of his biggest investment mistakes. He was sitting in the front row. Geico, Berkshire’s auto insurance division, was one of Google’s early major advertisers. In the early days of online marketing, the company paid users about $10 each time they clicked on a search ad.
Buffett said in 2018: “I had seen the product work and I knew what margins[the product]had. I didn’t know enough about the technology to know if this was really going to stop the competition.”
