Alphabet Inc. (GOOGL) Stock Jumps as Buffett’s Berkshire Reveals $4.9 Billion Investment

TLDR

• Berkshire Hathaway disclosed a 17.85 million share stake in Alphabet worth $4.9 billion as of September 30
• Alphabet stock jumped 5.5% in premarket trading Monday following the Friday regulatory filing
• Warren Buffett ends his 60-year CEO run at Berkshire in 2025, making this potentially one of his final major investment decisions
• Buffett and Charlie Munger publicly regretted not buying Google shares earlier at the 2019 annual meeting
• Berkshire has historically avoided tech stocks, with Apple being the main exception in its portfolio

Alphabet stock soared 5.5% in premarket trading Monday after Berkshire Hathaway revealed a major new position. The investment marks a shift for Warren Buffett’s investment firm, which has long avoided technology companies.

Alphabet Inc., GOOGL

A regulatory filing Friday showed Berkshire held 17.85 million Alphabet shares as of September 30. The stake is valued at $4.93 billion based on recent closing prices.

The purchase is especially interesting given Buffett’s timeline. He steps down as Berkshire CEO at the end of 2025 after 60 years leading the company. Greg Abel will replace him.

The filing doesn’t reveal who authorized the purchase. Buffett usually handles the biggest investments personally. But portfolio managers Todd Combs and Ted Weschler also buy stocks for Berkshire.

Years of Regret Finally Addressed

Buffett and his late partner Charlie Munger discussed Google at the 2019 shareholder meeting. They admitted missing out on the stock was a mistake.

Berkshire built its reputation avoiding complex technology businesses. Buffett prefers companies with straightforward business models he can understand.

Apple is Berkshire’s largest holding. Buffett justifies that position by calling Apple a consumer products company rather than a tech firm.

The Alphabet investment suggests a more flexible approach. Google dominates search and owns YouTube, two powerful platforms.

Breaking the Tech Barrier

Berkshire’s technology skepticism is well documented. The firm focused on banks, insurance, and consumer goods for decades.

Adding Alphabet to the portfolio alongside Apple shows tech companies are no longer off limits. Both generate massive cash flows and have strong competitive positions.

The investment timing coincides with concerns about artificial intelligence spending. Michael Burry, known for “The Big Short,” recently deregistered his hedge fund after criticizing AI companies.

Berkshire’s purchase suggests confidence in Alphabet’s fundamentals despite these worries. The position adds another tech giant to its equity holdings.

Market reaction was immediate. Alphabet shares rose before regular trading began Monday. Berkshire’s stock picks often boost investor confidence given Buffett’s track record.

The shares were held as of September 30 according to the filing. Berkshire could have purchased them anytime during the third quarter.

Buffett typically oversees investments of this size personally. But with Abel taking over soon, the decision-making process may be shifting. The filing provides no clarity on who made the call.

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