Berkshire Hathaway (BRKA +0.21%) (BRKB +0.31%) started a new era this year. The company’s legendary CEO, Warren Buffett, stepped down (he remains the company’s chairman), with Greg Abel taking over the helm. Over his short tenure as CEO, Greg Abel has already overseen several notable investment decisions. One of them was to purchase roughly $23 billion worth of Alphabet (GOOG +4.44%) (GOOGL +4.88%) shares since the start of the year.
Berkshire Hathaway first initiated a position in Alphabet in the third quarter of 2025. In fact, Warren Buffett has said that he was behind it. That said, Abel and his team probably aren’t done investing in the tech leader yet. Here is why Berkshire Hathaway will likely acquire even more Alphabet shares in the coming quarters, and why investors might want to do the same.
Image source: The Motley Fool.
There is precedent
Warren Buffett’s investing philosophy, which Greg Abel said he would keep intact within the company, is to buy and hold shares in attractive companies over the long term. Several past examples also show that for the conglomerate, high conviction leads to repeated buying, sometimes over years. Consider the case of Apple, currently Berkshire Hathaway’s largest holding. The conglomerate initiated a position in the stock in the first quarter of 2016 and continued buying it practically every quarter until the end of 2018.
The case of Visa offers another example, though it is a bit more mixed. Between 2011 and 2016, Berkshire Hathaway bought Visa’s shares on nine occasions, with a couple of sales sprinkled throughout this period. We see similar trends with several other companies that Berkshire Hathaway has invested in, including Occidental Petroleum. This pattern with previous high-conviction stocks suggests we may see Berkshire Hathaway do the same with Alphabet, since recent purchases already indicate that management considers Alphabet a high-conviction stock. Including a $10 billion purchase of Alphabet’s shares in a private placement, the stock is now among the five largest holdings in Berkshire Hathaway’s portfolio.
Today’s Change
(0.21%) $1,649.99
Current Price
$768,250.00
Key Data Points
Market Cap
Day’s Range
$766265.52 – $780020.00
52wk Range
$691120.27 – $780020.00
Volume
154
Avg Vol
208.6
Gross Margin
23.70%
The price is still right
Alphabet’s financial results have been outstanding of late. In the second quarter, the company’s revenue increased by 24% year over year to $119.8 billion. Operating income grew even faster, by 30% year over year, to $40.8 billion. Alphabet’s earnings per share were $9.11, up from $2.31 in the year-ago period. The company’s earnings benefited from the impact of equity investments. But even with that caveat, Alphabet’s financial results were excellent.
The tech leader’s cloud computing business deserves a lot of credit for that. Cloud sales soared 82% year over year to $24.8 billion, and the company ended the period with a cloud backlog of $514 billion. Alphabet has the smallest market share among the Big Three in the cloud computing industry, but the company’s cloud business is perhaps strongest in artificial intelligence (AI) infrastructure and data analytics.
Demand for services in that corner of the market is driving the company’s incredible sales growth. And there is more where that came from, as AI infrastructure spending is projected to maintain a healthy, sustained northbound path at least over the next few years.
Today’s Change
(4.44%) $15.82
Current Price
$372.47
Key Data Points
Market Cap
Day’s Range
$363.26 – $376.10
52wk Range
$194.47 – $404.47
Volume
27.2M
Avg Vol
22.3M
Gross Margin
60.94%
Dividend Yield
0.23%
Some investors worry that Alphabet is spending too much money on its AI ambitions. It is now projecting capex of $195 billion to $205 billion this year, up from its previous guidance of $180 billion to $190 billion. The tech giant’s free cash flow for the second quarter was also negative. However, Alphabet’s outstanding results and massive cloud backlog justify the company’s decision to invest more. And even beyond its cloud business, Alphabet is performing well.
Its core advertising segment is booming thanks to its leadership in industries such as internet search, and the company boasts a wide moat from network effects. That’s an important factor Buffett always looks at before investing in a stock: Whether it has a competitive edge. Something else Buffett considers is valuation, and he should love where Alphabet currently stands on that front.
It is trading at about 18.1x forward earnings, lower than the average of 20x for information technology stocks. It’s forward price-to-earnings is also the lowest among the Magnificent Seven companies. That’s another reason why Berkshire Hathaway may double down and buy more shares: Alphabet currently looks undervalued. Retail investors should also consider investing in the stock.
