Key Points
- Berkshire Hathaway has purchased a $4.93 billion stake in Alphabet, sending the stock up nearly 6% to a record high.
- The investment is seen as a major endorsement of Alphabet’s AI strategy, especially amid growing fears of an AI bubble.
- This is a rare move into a major tech company for the typically tech-averse Berkshire Hathaway.
- Alphabet has been outperforming its “Magnificent Seven” peers and trades at a more attractive valuation.
Alphabet’s stock surged nearly 6% to a record high on Monday after it was revealed that Warren Buffett’s Berkshire Hathaway has taken a new, major stake in the company. The move is seen as a strong endorsement of the tech giant’s artificial intelligence efforts, coming at a time when worries about a potential AI bubble are growing.
Berkshire Hathaway purchased 17.85 million shares of Alphabet, worth about $4.93 billion as of Friday’s close. This is one of the last major investments made by the company under Warren Buffett’s leadership and marks a rare move into the tech industry for the famously tech-averse Berkshire.
This vote of confidence comes as the overall mood toward tech has grown more cautious. Many business leaders and experts have warned that the AI craze has pushed tech stock prices to unsustainable levels.
While the “Magnificent Seven” big tech stocks have been mostly flat since September, Alphabet has been a standout. Its shares have risen nearly 14% so far in the December quarter, making it the best-performing member of the group this year, with a 46% gain. Alphabet also trades at a lower valuation compared to its peers, which likely made it more attractive to Berkshire’s value-investing approach.
Several analysts believe Alphabet has a leading position in AI due to its heavy investments in infrastructure, the strong early adoption of its AI search tools, and its massive ad business, which can fund its huge data-center spending. “The move validates Google’s strong fundamentals and provides Berkshire exposure to a leading AI provider,” said CFRA analyst Angel Zino.
The investment also solves a long-standing regret for Buffett and his late partner, Charlie Munger, who had previously lamented missing out on Google in its early days. This comes just as Buffett is preparing to hand over the CEO role to Greg Abel at the end of 2025. It’s not clear who at Berkshire made the final decision to buy, but Buffett usually handles the company’s largest investments.
