In a move that sent shockwaves through the investment community, Warren Buffett’s Berkshire Hathaway has established a substantial $4.93 billion stake in Alphabet, the parent company of Google. This strategic acquisition marks a significant departure for the legendary investor, who has historically been wary of major technology investments outside of his well-known Apple position. The purchase of 17.85 million shares instantly propelled Alphabet into Berkshire’s top ten equity holdings.
A Strategic Pivot for the Conglomerate
The investment represents a notable shift in strategy for the conglomerate, which has typically avoided large-scale technology bets. According to Steve Sosnick, Chief Strategist at Interactive Brokers, “Purchasing a tech firm could indicate a different way of thinking at Berkshire.” He noted, however, that the company appears to be remaining true to its value-investing principles despite this new direction.
Market reaction was immediate and powerful. On Monday, Alphabet shares surged nearly 6 percent to reach a record high of $294.52. This upward movement translated into an astonishing $180 billion increase in market capitalization, demonstrating the potent “Buffett effect” that continues to influence market sentiment. Trading volume exploded as retail investors rushed to follow Buffett’s lead, making Alphabet one of the most actively traded stocks across investment platforms.
Value Proposition in the AI Landscape
Alphabet has emerged as a standout performer among the “Magnificent Seven” tech stocks in 2025, posting an impressive 46 percent year-to-date gain. Despite this strong performance, the company appears reasonably valued compared to AI competitors like Microsoft and Nvidia, trading at a forward P/E ratio of 25 for 2025.
“Alphabet aligns better with value-investing themes than some other names currently leading the AI revolution,” Sosnick observed. The company brings substantial AI advantages through massive infrastructure investments, early deployment of AI search tools, and a massive advertising business that helps fund data center expansion.
Strong Fundamentals Support the Decision
Recent quarterly results reinforced Alphabet’s growth narrative. The cloud division expanded 34 percent to $15.2 billion, while total revenue surpassed the $100 billion milestone for the first time. Perhaps more significantly, paid click growth accelerated from 2 percent in the first quarter to 7 percent in the third quarter.
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CFRA analyst Angel Zino emphasized that “the move validates Google’s strong fundamental data and gives Berkshire exposure to a leading AI provider.” The company’s cash flow generation and reasonable valuation likely provided Berkshire with greater confidence in making this substantial investment.
Contrarian Moves in a Broader Context
The Alphabet purchase becomes particularly interesting when viewed alongside other portfolio adjustments. While building this new position, Berkshire simultaneously reduced its stakes in both Apple and Bank of America. The conglomerate’s cash reserves swelled to a remarkable $381.7 billion, signaling Buffett’s view that overall market valuations appear stretched.
This selective bet on Alphabet arrives as market sentiment toward technology stocks grows increasingly cautious. Concerns are mounting about returns on AI investments and elevated valuations across the sector.
A Long-Awaited Strategic Positioning
The investment resolves long-standing regret for both Buffett and his late vice chairman, Charlie Munger, who had previously missed the opportunity to invest in Google during its early growth phases. The timing carries additional significance as Buffett prepares to transition the CEO role to Greg Abel at the end of 2025.
The Alphabet position strategically diversifies Berkshire’s portfolio further into the technology sector, which currently comprises just 36.6 percent of its holdings. This movement signals selective confidence in AI leaders with proven cash flows and reasonable valuations, even as general tech euphoria faces increasing scrutiny from market participants.
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