Berkshire Hathaway builds $30 billion Alphabet stake as AI bets grow

Berkshire Hathaway has built a $30 billion position in Alphabet, the parent of Google, in what stands as Warren Buffett's largest technology bet before he steps back from day-to-day operations at the end of 2025. The stake makes Alphabet Berkshire's third- or fourth-largest holding.

"It was a mistake for Berkshire Hathaway to exclude owning Alphabet for so many years," Buffett told CNBC's Becky Quick in a mid-July interview, citing the attractiveness of the Google Search business.

The position combines $10 billion in newly issued Alphabet common stock purchased in June at roughly $350 a share with about $20 billion in open-market purchases made in late 2025. Alphabet's Google Cloud division grew revenue 82 percent year over year last quarter to $24 billion, with operating income of $8.8 billion, while Google Services revenue rose 15 percent to $94.5 billion. Gemini, Alphabet's answer to ChatGPT, reached 950 million monthly active users last quarter.

Alphabet trades at an enterprise value-to-EBIT ratio of 26, a level that looks reasonable for a company growing revenue at double-digit rates as the AI build-out accelerates. The $80 billion equity offering Alphabet announced June 1 funds capital expenditures to scale AI infrastructure and global compute.

Berkshire's bet on Alphabet

Back in June, Alphabet sold $10 billion in newly issued common stock to Berkshire Hathaway at a price of roughly $350 per share. On July 30, the stock closed at $333. That followed Berkshire's open-market purchases in late 2025, which amount to approximately $20 billion at current trading prices. Buffett said in a mid-July interview with CNBC's Becky Quick that he initiated that investment.

The investment came as a surprise, as Berkshire Hathaway typically eschews technology investments. Buffett built his fortune in insurance, newspapers, and consumer goods brands like Coca-Cola. The move into Alphabet marks a departure from that playbook.

Google Cloud leads the AI infrastructure race

Alphabet is one of the largest AI infrastructure providers through its Google Cloud division. Google Cloud revenue grew 82 percent year over year last quarter to $24 billion, with operating income of $8.8 billion. This was a business with little revenue a decade ago that was hemorrhaging cash, but Alphabet's bet on cloud computing and AI is beginning to pay off.

Despite fears that AI services like ChatGPT or Claude would dethrone Google, the search business is still growing revenue at a double-digit rate. Gemini, Alphabet's direct competitor to ChatGPT, is growing quickly with 950 million monthly active users last quarter. Alphabet's gross margin of 60.94 percent reflects the profitability of its advertising and cloud businesses.

Valuation and the investment case

Investors cannot use the price-to-earnings ratio to measure Alphabet because of one-time gains from its Space Exploration Technologies investment that impact net income. The enterprise value-to-EBIT ratio of 26 provides a cleaner read. Alphabet's market cap stands at $4.1 trillion, with a dividend yield of 0.24 percent.

Alphabet needs capital to fund data centers for its Google Cloud business. Berkshire Hathaway has the capital to buy newly issued shares and can put the Buffett stamp of approval on the equity raise as Wall Street grows nervous over the capital being deployed into AI infrastructure.

For investors, the Berkshire position offers a strong endorsement of Alphabet's AI strategy. The stock, trading at an EV/EBIT of 26, is priced for continued double-digit revenue growth. With Google Cloud growing at 82 percent and Gemini reaching nearly a billion users, Alphabet remains a leading candidate for a buy-and-hold AI portfolio.

This article is for informational purposes only and does not constitute investment advice.