The addition of Alphabet comes amid a massive rally. Even after the most recent AI-fueled stock market selloff, Alphabet shares are still up 46% this year.
To be sure, Alphabet has been on Berkshire’s radar in the past. In 2019, Buffett’s right-hand man at the time, the late Charlie Munger, admitted that he felt “like a horse’s ass for not identifying Google better. I think Warren feels the same way.”
Back then, Google’s dominance in search piqued Berkshire’s interest. But today, the company is among the tech giants leading the charge into AI.
Morgan Stanley has estimated AI hyperscalers plan to spend about $3 trillion on data centers and other infrastructure through 2028.
The relentless capital expenditures, much of which is coming via debt, have made Wall Street nervous about whether AI companies will be able to translate all those outlays into sustainable revenue and profits.
With Buffett due to step down as Berkshire’s CEO by year’s end, it’s not immediately clear whether he, successor Greg Abel, or another top executive made the call to buy Alphabet stock.
Leading up to Buffett’s departure, Berkshire has been taking a cautious stance on the stock market as well as company acquisitions, sending its cash pile to record highs.
