Alphabet shares surged Monday after Warren Buffett’s Berkshire Hathaway disclosed a new position in the Google parent company—one of the conglomerate’s most notable technology investments in years.
The stock climbed 5% in morning trading, outperforming a broader pullback across the tech sector.
Alphabet Shares Jump
According to Berkshire’s latest 13F filing, the firm held roughly $4.3 billion in Alphabet as of Sept. 30, making it the company’s 10th-largest equity stake. The move caught many Buffett followers off guard, given his long-standing caution around fast-growing tech firms. Buffett has traditionally categorized Apple—Berkshire’s largest holding—not as a tech play but as a consumer products business.
The Alphabet purchase was likely driven by investment managers Todd Combs or Ted Weschler, who have taken on greater responsibility within Berkshire’s $300 billion portfolio. Still, the size of the position suggests that Buffett, who will step down as CEO at year-end, likely approved the decision. Combs and Weschler have pushed Berkshire further into technology before, including the 2019 purchase of Amazon, a stake currently valued at $2.2 billion.
Alphabet has been a standout performer this year, rallying 46% as investors reward its accelerating AI development and sharply improving cloud division profitability. Google Cloud — once a drag on margins — has become a major contributor to earnings growth.
A shift in strategy?
Bill Stone, chief investment officer at Glenview Trust Company, suggested the investment may signal a broader evolution in Berkshire’s thinking as leadership transitions to the next generation.
“Perhaps the purchase of Alphabet signals a widening of the circle of competence into technology,” Stone said.
Greg Abel, Buffett’s long-time deputy, is set to assume the CEO role in January, while 95-year-old Buffett will remain chairman.
Despite its strong 2025 rally, Alphabet still trades at a discount to many AI-linked megacap peers. Its forward price-to-earnings ratio is 25.5, compared with 32.0 for Microsoft, 50.8 for Broadcom, and 41.9 for Nvidia, according to FactSet.
That valuation gap — combined with Alphabet’s enormous cash generation and dominant competitive position — likely made the stock especially appealing to Berkshire’s investment team.
“We think Berkshire likely finds more comfort investing in GOOG over other tech plays given the high free cash flow potential of its core business, along with an attractive valuation at about 22x 2027 EPS and a strong revenue growth outlook,” CFRA analyst Angelo Zino told clients.
Buffett has previously acknowledged that not investing in Google earlier was a major mistake. He had firsthand exposure to its business model: Geico, Berkshire’s auto insurance subsidiary, was one of Google’s earliest major advertisers, paying roughly $10 per click in the early days of search advertising.
“I had seen the product work, and I knew the kind of margins they had,” Buffett said in 2018. “I just didn’t know enough about technology to know whether this really was the one that would stop the competitive race.”
