Buffett’s Berkshire buys $4 billion worth of Google stock, boosting confidence in AI

Shares of Alphabet, Google’s parent company, hit a record high of $293.95 on Monday before giving back some of those gains after Berkshire Hathaway announced it had bought nearly 18 million shares worth more than $4 billion in the third quarter.

The move served as an endorsement of the tech giant’s efforts in artificial intelligence amid increased concerns about a looming bubble. What’s more, it’s one of the conglomerate’s last major investments under Warren Buffett and marks a rare foray into the sector by tech-averse Berkshire.

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The mood of confidence comes as broader sentiment on technology has turned cautious, with several business leaders and experts warning that the AI ​​frenzy driving up tech stock prices has disconnected valuations from fundamentals and returns on hundreds of billions in data center spending remain uncertain.

T-Rex 2X Long Alphabet Daily Target ETF, Global followed by VettaFi.

Still, Alphabet was an outlier: its shares are up nearly 14% so far in the December quarter, making it the best-performing ‘Magnificent Seven’ member of the year with a 46% gain.

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“Alphabet fits the value investing theme better than some of the other names currently leading the AI ​​charge,” Sosnick said.

Several analysts say Alphabet has a leading position in AI thanks to growing infrastructure investments, strong early adoption of AI search tools and a huge advertising business that can fund data center spending.

“This move affirms Google’s strong fundamentals and provides Berkshire with exposure to a leading AI provider through the expansion of Google Cloud and Gemini,” said CFRA analyst Angel Zino, adding that Alphabet’s cash flow and valuation likely gave the conglomerate “more comfort” in its decision.

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Investors piled into the stock last month after earnings results showed that AI investments were turning Google Cloud, which once operated, into a key growth engine.

Warren Buffet and Charles Munger, Berkshire Hathaway’s top executives, prior to Munger’s death. (JOHANNES EISELE/AFP via Getty Images)

Buying Alphabet stock would also address long-standing regrets from Buffett and late Vice Chairman Charlie Munger about missing out on Google early, just before the “Oracle of Omaha” prepares to pass the CEO role to Greg Abel at the end of 2025.

It was unclear whether the Google purchase was made by Buffett, portfolio managers Todd Combs or Ted Weschler, or Abel, although Buffett typically oversees Berkshire’s largest investments.

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Overall, Berkshire remained a net seller of stocks in the September quarter, further reducing its positions in Apple and Bank of America, pushing its cash hoard to a record $381.7 billion.

Some investors see the build-up of Berkshire’s cash reserves as a sign that Buffett thinks valuations are too high.

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The company’s stock portfolio remains heavily focused on financial services, which represented 36.6% of stocks in September, according to Morningstar.

Reuters’ Niket Nishant and Aditya Soni in Bengaluru; Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila, contributed to this report.