Why is Alphabet's valuation low?

The Motley Fool says the low valuation reflects market uncertainty about AI spending, with Alphabet shares trading at a forward price-to-earnings ratio of 18.5.

What is Alphabet's position in Berkshire Hathaway's portfolio?

Between the Class A and Class C shares, Alphabet is Berkshire Hathaway's fourth-largest position.

How much has Alphabet's stock moved recently?

Alphabet shares have soared 124% in the past 36 months as of Nov. 4 and now trade 28% below their peak.

AI Stocks & MarketsTop Companies' AI MovesAI Business & IndustryTop Companies AI11m agoNov 10, 2026, 06:30 JST

Berkshire's top AI holding Alphabet set to outperform

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3 Key Points

What happened
The Motley Fool argues Alphabet, Berkshire Hathaway's top AI holding and fourth-largest position, is poised to outperform, with shares trading 28% below their peak and at a forward P/E of 18.5.
Why it matters
The low valuation reflects market worry about AI spending, which long-term investors may see as a compelling entry point for a business with a leading AI position.

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Context & Analysis

Berkshire Hathaway began buying Alphabet in the third quarter of last year, and current CEO Greg Abel followed up with additional purchases. That build-up made Alphabet the conglomerate's fourth-largest position across Class A and Class C shares.

The current setup centers on a tension in Alphabet's finances: capital expenditures are set to total roughly $200 billion in 2026 and management projects a substantial rise next year, while free cash flow was $9.1 billion in the red in the third quarter and long-term debt rose 169% from the end of last year to $125.1 billion. Shares dipped after Q3 results missed on both the top and bottom lines, with Google Search sales slowing to 12%.

AI-driven growth cuts against that: Google Cloud posted a 103% Q3 sales gain and a $561 billion backlog, and sell-side analysts' consensus estimates project operating income growing at a compound annual rate of 28.1% from 2025 to 2028. The Motley Fool treats the resulting valuation as a compelling entry point for long-term investors.

FAQ

Why is Alphabet's valuation low?: The Motley Fool says the low valuation reflects market uncertainty about AI spending, with Alphabet shares trading at a forward price-to-earnings ratio of 18.5.
What is Alphabet's position in Berkshire Hathaway's portfolio?: Between the Class A and Class C shares, Alphabet is Berkshire Hathaway's fourth-largest position.
How much has Alphabet's stock moved recently?: Alphabet shares have soared 124% in the past 36 months as of Nov. 4 and now trade 28% below their peak.

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