Warren Buffett is the most famous technology skeptic. So when a quarterly securities report revealed late Friday that Buffett’s Berkshire Hathaway had for the first time taken a multibillion-dollar stake in Alphabet, Google’s parent company, investors sat up and took notice. Alphabet shares rose about 5% before Monday’s market open.
Berkshire’s new position was made public after a nearly 50% rally in Google shares so far this year, all the more surprising because Berkshire’s investor team is well known for waiting until stock prices look cheap. Even though Berkshire has, over the past decade, made similar bets on Apple and Amazon, the decision still carries enormous weight. Given Buffett’s long-standing aversion to highly valued growth stocks, not to mention his reputation for caution near market peaks, Berkshire’s vote of confidence suggests Alphabet stock is fairly valued or even cheap, despite the run-up to the rally.
Friday’s routine 13F filing revealed that Berkshire acquired roughly 18 million shares, worth about $4.3 billion, sometime in the third quarter, with Alphabet now the conglomerate’s 10th largest holding. The purchase most likely came from one of Buffett’s two portfolio managers, Todd Combs or Ted Weschler, who have been given power to make smaller bets within Berkshire’s $350 billion stock portfolio. The two have pushed Berkshire into technology since the late 2010s, as evidenced by positions in Amazon and Apple, which have so far paid off well.
Berkshire’s backing also adds a layer of legitimacy to Google’s AI narrative, signaling confidence even as investors in recent weeks have balked at AI-related development costs among major tech companies like Meta.
For Buffett, 95, it also represents a late-career redemption of sorts. The investor, who is never ashamed to admit his mistakes, has said publicly that he “blown it up” by not buying Google early. For analysts and traders, the move also offers a glimpse into Berkshire’s post-Buffett future, a future slightly more welcoming to Silicon Valley and, by extension, AI.
The stake comes as Berkshire continues to cut other technology holdings, including another 15% cut to its huge position in Apple, which is now worth about $60 billion.
Still, Apple remains your biggest investment.