Warren Buffett's Berkshire Hathaway has announced a new investment in Alphabet, elevating the Google parent company to the conglomerate's 10th largest equity position as of the end of September, according to recent regulatory filings.
Berkshire revealed a $4.3 billion stake in Alphabet by the third quarter's close, which comes as an unexpected move given Buffett's usual preference for value investing and his historical caution towards high-growth tech stocks. Though Berkshire has held a long-standing position in Apple, Buffett has historically categorized it more as a consumer products company than a traditional tech firm.
The decision to invest in Alphabet likely originated with Berkshire's investment managers Todd Combs or Ted Weschler, who have actively pursued technology investments in the past. One of them initiated an investment in Amazon in 2019; Berkshire currently maintains a $2.2 billion stake in the e-commerce giant.
This year, Alphabet has distinguished itself in the market, with its share price climbing 46%. Its burgeoning cloud business, driven by increasing demand for artificial intelligence, has contributed significantly to this momentum.
Buffett has previously acknowledged missing the opportunity to invest in Google early on, despite recognizing its advertising potential from the outset. Berkshire's Geico auto insurance division was an early Google customer, reportedly paying $10 per ad click. Reflecting on this, Buffett remarked in 2018, "I had seen the product work, and I knew the kind of margins [they had]," admitting a lack of technological insight to foresee Google's eventual dominance.