Berkshire Puts $36.6B in Alphabet—10% of Portfolio

Warren Buffett's move into Alphabet represents a significant shift in his long-held skepticism of internet companies. The Oracle of Omaha, who retired as CEO at the end of 2025 to become chairman, led the decision to initiate this position during the third quarter last year—well into the ongoing AI revolution. That Berkshire structured the investment through both a $10 billion private placement and open market buys underscores the seriousness of the conviction.

The timing and scale of the investment reveal confidence in Alphabet's ability to monetize massive AI infrastructure spending. Alphabet plans to deploy $200 billion at the midpoint in 2026, and Buffett's willingness to commit substantial capital despite the resulting negative free cash flow of $5.9 billion in Q2 signals that his team believes these capex investments will generate adequate returns over a multi-year horizon. The fact that Alphabet maintains $242 billion in cash and a 35% operating margin provides a financial cushion for this transition.

From a valuation standpoint, Buffett's discipline is evident: even as the stock has gained 70% in a year, the P/E ratio has compressed by 20% to 17.4—well below the S&P 500's multiple. This aligns with Buffett's core principle of never overpaying, regardless of recent momentum. Berkshire's next 13F filing, due in about three months, will reveal whether the conglomerate has continued to build the position, a decision that likely hinges on both Alphabet's near-term capital allocation and the durable competitive advantages Buffett perceives in Google Search, YouTube, and Google Cloud.