Legendary investor and Berkshire Hathaway chairman made a loud statement that instantly impacted stock prices. During the morning broadcast of Squawk Box, he expressed confidence that Alphabet's securities could outperform 90% to 95% of all assets typically recommended by Wall Street analysts. The market reacted immediately: GOOGL shares surged 3.65%, reaching $370.36, and the value of Berkshire's managed portfolio exceeded $31 billion. Currently, the tech giant trails only Apple and American Express in the fund's investment portfolio.
Buffett's Personal Decision: Who Initiated the Deal?
For a long time, rumors circulated on the market that the purchase of the IT giant was initiated by Berkshire's new CEO Greg Abel. However, Buffett dispelled these doubts with a short and succinct phrase: "I initiated it." He clarified that the final word remains with Abel — they consult daily and coordinate all decisions. At the May shareholder meeting, Abel detailed Berkshire's strategy for developing artificial intelligence, which apparently served as the catalyst for entering the position.
The position in Alphabet was built gradually. Berkshire began purchases in the third quarter of 2025 and increased its stake until early 2026. In June, the company acquired an additional $10 billion through a private deal tied to Alphabet's $80 billion AI fundraising. According to an SEC filing, Berkshire paid $351.81 per Class A share and $348.20 per Class C share.
Billion-Dollar AI Spending: "Real Money"
Buffett openly discusses the associated risks but emphasizes the scale of the investments. Alphabet plans to allocate approximately $180–190 billion in capital expenditures this year alone, and this budget is expected to grow in 2027. The financier compared these investments to the spending of major railroad networks, calling them "real money." He also acknowledged past miscalculations, regretting that he long ignored Google when the search business was worth significantly less.
"…the chances of such a company becoming a winner are higher than, probably, 90% or even 95% of everything Wall Street promotes. Wall Street is interested in what can be sold," Buffett stated.
The corporation's financial reports clearly confirm its strength. In the first quarter, Alphabet's revenue increased by 22%, rising to $110 billion. Meanwhile, Google Cloud's revenue surged by 63%. The tech giant's operating cash flow over the past twelve months amounted to an impressive $174 billion.
Of course, such a high valuation came with important caveats. The legendary investor admitted that within Berkshire Hathaway itself, there are four or five subsidiaries he likes much more. Speculators and stock analysts also faced criticism from the speaker — in his view, experts are overly focused on short-term quarterly results rather than assessing long-term business profitability.
Decades of capital management experience allow Buffett to draw such conclusions. His previous major investment in the IT sector occurred in 2016 — the purchase of Apple shares brought the holding record profits in its history. Recently, Alphabet was added to the Dow Jones index calculation base, and major funds continue to reallocate resources toward the IT sector amid the cryptocurrency market downturn. It is also known that a group of other prominent billionaires named Amazon as the most promising asset in the AI field.
Expert opinion: Buffett's investment in Alphabet is not just a bet on a search engine but a long-term view on the monopolization of cloud and AI services. It is telling that even after acknowledging past mistakes, he enters the asset when the market is overheated by AI rumors. This is a signal: fundamental indicators and cash flow matter more to him than trendy fads.