Alphabet stock Monday on news that Warren Buffett’s Berkshire Hathaway bought a stake in the owner of Google even as the stock market got crushed.
Fears that artificial-intelligence would eat away at its search-engine dominance are fading. Alphabet stock rose 3.1% to $285.02 on Monday, while the S&P 500 fell 0.9%, and the Dow Jones Industrial Average dropped 1.2%.
Berkshire purchased 17.8 million shares of Alphabet during the third quarter, according to a filing on Friday. The shares were valued at more than $4.3 billion at the end of September.
While the purchase is relatively small in the context of Berkshire’s roughly $300 billion equity portfolio, it is a rare venture into the technology sector and a sign of confidence in Alphabet’s hefty spending on AI infrastructure.
Berkshire looks to have chosen Alphabet as the bargain on offer in the wider AI trade.
“We think Berkshire likely finds more comfort investing in Alphabet over other tech plays given the high free cash flow potential of its core business coupled with an attractive valuation at about 22 times 2027 EPS [forecast earnings per share] amid a healthy top-line growth trajectory,” wrote CFRA Research analyst Angelo Zino in a research note.
Berkshire doesn’t disclose and Buffett generally doesn’t discuss which positions are his and which are overseen by investment managers Ted Weschler and Todd Combs, who run about 10% of Berkshire’s equity investments.
Alphabet has regularly been among the cheapest of the large technology companies this year when measured on its price-to-earnings ratio, amid concerns it would lose share in its key search market to AI-powered alternatives such as ChatGPT and Perplexity.
However, Wall Street analysts note Google’s own AI innovations look to be driving increased numbers of search queries. Alphabet stock has nearly doubled in price since its lows in April.
A new Google AI could be around the corner, with the expected launch of its Gemini 3 model. The chances of a release coming this week are put at 91% on prediction market Polymarket. Alphabet CEO Sundar Pichai responded to a post on social-media platform X noting the bets on a launch with a pair of thinking emojis on Friday.
Alphabet was a Barron’s stock pick coming into 2025, based on its ability to fight back against rivals and the fact the possibility of a government-mandated breakup was priced in. The stock is up 64% since then, helped by a ruling in an antitrust case against the company which mandated only limited remedies to address its monopoly on internet search.
