Berkshire Hathaway ‘s stake in Alphabet is turning out to be strikingly well-timed, with the stock surging 13% since Google unveiled its new Gemini 3 AI model in mid-November. The conglomerate recently disclosed a $4.3 billion position in Alphabet in its latest 13F filing, making the Google parent Berkshire’s 10th-largest stock holding as of the end of September. At the time, the move was notable mainly because of Berkshire’s long-standing reluctance to dive into high-growth tech names, other than Apple. The timing of the purchase has caught investors’ attention. Berkshire likely initiated its position only weeks before Alphabet’s biggest AI release in years, a launch that has helped ignite a sharp rally in the shares. The latest advance has brought the 2025 increase in Alphabet to 70%, on pace for the largest annual gain in the YouTube owner since 2009. GOOGL YTD mountain Alphabet shares YTD Still, Buffett would be the first to reject any suggestion of market timing. He has spent decades warning investors not to try it, and the investment almost certainly came from one of his lieutenants, Todd Combs or Ted Weschler, who are more comfortable making tech-oriented bets. Buffett, who’s stepping down as Berkshire CEO at the end of the year, previously admitted that he “blew it” by failing to invest early in Google even though he had insight into its advertising potential. Berkshire’s auto insurance unit Geico was an early customer of Google, paying the search engine $10 every time someone clicked on an ad. “I had seen the product work, and I knew the kind of margins [they had],” Buffett said in 2018. “I didn’t know enough about technology to know whether this really was the one that would stop the competitive race.” Burry’s view Michael Burry of ” The Big Short ” fame believes that Alphabet is actually the most traditional “value” play among big technology companies, the one investors often justify as cheaper than its peers. “Google is the value investor’s favorite in that group. It’s the one that everybody said, ‘Well, it’s cheaper than all the others, it’s got good relative value,'” Burry said in a recent podcast with Big Short author Michael Lewis. Burry also questioned how much generative AI will ultimately change day-to-day consumer behavior in comparison with search engines. Because Google’s profitability has long depended on its ability to serve the bulk of global search traffic, earnings could weaken if users shift to AI chatbots, he said. “The magic thing about Google Search was how little it cost … so they better not lose a lot of money on that. AI changes that. AI is expensive,” Burry said. “Google had had those searches down to infinitesimal fractions of a cent. So that business is the golden goose. And it’s really basically all their cash flow.”
Saturday, February 14
Warren Buffett nailed the timing on Alphabet — whether by design or not
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