Warren Buffett recently stepped down as chairman of Berkshire Hathaway, and he had no prior history of holding technology companies. Although the investment in Apple (AAPL) can be seen as a bet on a powerful consumer brand, the company’s massive bet on Alphabet (GOOGL) (GOOG) marks an evolution. The legendary investor and his successor, Greg Abel, are extremely bullish on this artificial intelligence giant’s stock.
In the third quarter of 2025, Buffett personally initiated Berkshire’s first purchase of Alphabet stock, which was surprising. He clearly understood the internet giant’s dominance: its platform is widely adopted and difficult to replace, and it possesses network effects, first-class technical expertise, and considerable profits. Berkshire continued to increase its holdings in 2026. As of September 25, Alphabet accounted for 10% of its entire investment portfolio, and its Class A and Class C shares combined made it the third-largest holding.
Abel and Buffett are clearly bullish on this leading AI company, whose current price-to-earnings ratio is 22.8 times, a reasonable valuation. At a time when Alphabet is raising large amounts of financing and aggressively investing in data center construction, the two have shown confidence. They firmly believe that the company can obtain satisfactory returns from its enormous capital expenditures, and time will prove whether this judgment is correct.
In June of this year, Berkshire increased its investment in Google’s parent company Alphabet, buying an additional $10 billion of stock directly from the company. This private placement, together with open-market purchases, increased Berkshire’s second-quarter holdings by $17 billion, to about $36.6 billion. It is now the third-largest holding in Berkshire’s stock portfolio, and its rapid growth may lead retail investors to wonder: is the company seeking to replicate the huge success of its Apple investment, or is it taking a completely different angle?
Given that Apple and Alphabet are both members of the “Magnificent Seven” and major AI stocks, it is not surprising that outsiders compare Berkshire’s new investment with its 2010s investment in Apple. But this is not a complete “Apple 2.0.” Berkshire built its Alphabet position in a different way from its Apple position. Although both were mainly purchased through the open market, Berkshire never directly invested in Apple equity. Its $10 billion private placement in Alphabet is more like its past direct investments in well-known companies such as General Electric. The difference is that Berkshire bought Alphabet’s Class A and Class C common stock at a discount to the then-current trading price. Similar to past transactions, the issuer not only obtained capital but also received Berkshire’s “endorsement.” Alphabet’s financial condition is not as distressed as General Electric’s was when it sought help years ago, but as the market becomes increasingly worried about its AI infrastructure spending, Berkshire’s “buy” indeed boosted public sentiment.
Beyond the transaction mechanics, Berkshire’s massive investment in Alphabet also differs from Apple in intent. Buffett himself clarified that although he “initiated” the investment, Abel was the “decision-maker” for subsequent investment decisions. The two may view this investment in different ways. Buffett may have found Alphabet attractive based on criteria such as balance sheet strength, competitive moat, and valuation, just as he discovered Apple’s value. According to Abel’s recent comments in a CNBC interview, however, his decision to increase the holding may stem from seeing how AI affects Berkshire’s operating businesses. Understanding how technology benefits its subsidiaries clearly strengthened his confidence that Alphabet’s AI infrastructure investment will generate huge returns.
From this perspective, Berkshire’s investment in Alphabet is not only different from its investment in Apple, but also significantly deviates from Buffett’s long-held approach of “buying excellent companies at reasonable prices.”
