- Berkshire’s stake in Alphabet signals a reversal of its old “mistake” of skipping Google and reflects a belief that future AI profits will concentrate in strong, cash-rich technology platforms.
- The robust growth of cloud services, heavy spending on data centers and chips, and broad revenue streams position Alphabet as a stable exposure to AI infrastructure.
- Reducing its Apple position while increasing its exposure to Alphabet suggests a preference for cloud-based AI, search and software ecosystems rather than AI tied to hardware upgrade cycles.
Ruben Dalfovo, Investment Strategist at Saxo, writes in his analysis that for years Warren Buffett’s history with Google has been a cautionary tale. He openly admitted that not buying the company’s shares was a major mistake, even though he watched Google turn online search into a money-printing advertising engine. Now, just months before handing over the reins to Greg Abel, Berkshire Hathaway quietly purchased a multibillion-dollar stake in Google’s parent company, Alphabet.
Alphabet’s Class C shares closed at USD 285.60 on November 17, up 3.11% on the day, after reports of the new stake pushed the stock to record levels. Since the start of 2025, the stock has risen about 50%, making it the best performer among the so-called Magnificent Seven this year. When an investor known for avoiding fashionable trends buys shares of a market leader whose price is near all-time highs, the obvious question arises: what does he see that the rest of us might be missing?
From Apple to Alphabet
For twelve consecutive quarters—including the latest one—Berkshire has been a net seller of equities. Over that period, it sold roughly USD 12.5 billion worth of stocks while buying about USD 6.4 billion, allowing its cash pile to grow to a record USD 381.7 billion. This is not the behavior of someone who believes everything is cheap. But within this broader reduction, a significant reshuffle has taken place.
In the past quarter, Berkshire reduced its stake in Apple by about 15% and trimmed its position in Bank of America by around 6%. Meanwhile, Alphabet emerges as a fresh entrant into the top-ten holdings. Regulatory filings and portfolio disclosures show that the stake now ranks roughly tenth in Berkshire’s equity portfolio, behind long-standing favorites like American Express, Coca-Cola and Chevron. For a conglomerate that has spent decades owning railroads, insurers and consumer-staple companies rather than fast-growing software giants, this is a rare move.
It’s not so much Buffett’s rules that have changed—it’s the companies themselves. Apple, which he always described as a consumer brand, now operates in a world where hardware upgrades increasingly hinge on AI-powered features. At the same time, Alphabet looks less like a speculative tech play and more like a vast digital infrastructure provider, with advertising and cloud revenues that are surprisingly stable for something built on lines of code.
Alphabet as AI infrastructure, not a gadget story
Alphabet sits at the intersection of ambitious AI development and traditional cash generation. In the third quarter of 2025, the company reported roughly USD 102 billion in revenue, surpassing estimates, with earnings also beating expectations. The main growth driver was Google Cloud, which has evolved from a “nice add-on” into a major business engine as AI developers rent its computational power.
Moreover, the Gemini models and the AI-enhanced search engine now reach hundreds of millions of users. These tools operate on a global network of data centers, custom chips and fiber-optic cables—an infrastructure build-out that will require over USD 90 billion in capital expenditures this year. Put simply: Alphabet wants to supply the “picks and shovels” for the AI gold rush.
Its partnership with Anthropic adds another layer. Google has invested billions in the startup and signed a major agreement to supply chips and cloud services, which should funnel future compute demand into Google Cloud. Berkshire’s stake gives it indirect exposure to this ecosystem: every Anthropic query run on Google’s infrastructure strengthens Alphabet’s position as an AI backbone.
Crucially, this expansion rests on a strong balance sheet. Alphabet trades at roughly 25× expected earnings—cheaper than some other megacaps—and continues to generate substantial free cash flow from search and YouTube. These funds can finance data centers while still supporting share buybacks—an appealing combination for investors seeking “wonderful companies at fair prices.”
What Buffett’s “vote of confidence” really means
Buffett’s purchase of Alphabet is more than a simple stamp of approval. It reflects a clear thesis about where AI profits will concentrate. Alphabet earns money through search advertising, YouTube, Maps, the app store and cloud services. AI is not a standalone product—it is an enhancement that can increase user engagement and improve monetization across existing businesses.
It also signals a pivot toward infrastructure rather than devices. Apple is betting on on-device intelligence but is still defining its AI business model. Alphabet, by contrast, already monetizes AI through cloud contracts, advertising tools and productivity software. Reducing Apple while increasing Alphabet suggests Berkshire sees more future value in data centers and platforms than in smartphone replacement cycles.
Finally, “technology” is not a single category. Alphabet may share an index with fast-growing AI startups, but its competitive moat, cash-generation capacity and diversified revenues place it closer to the steady compounders that Buffett has favored for decades.
The risks—even Berkshire can’t ignore them
Risks remain. Alphabet could overspend on AI compute capacity if customers slow down projects or if competitors win major contracts. Investors should watch Google Cloud’s growth rate, margins and long-term investment guidance. Regulatory threats also loom large: stricter antitrust or privacy rules in the U.S. and Europe could pressure search and advertising profitability or force changes in data use.
Execution in AI is another critical factor. Alphabet stumbled early in the generative-AI race and is still trying to regain momentum through Gemini and other models. If users or enterprise clients prefer competitors’ tools, all that spending on chips and data centers may generate lower-than-expected returns—even with Buffett on the shareholder roster.
Bringing it all together: what Buffett’s Alphabet bet really teaches us
For years, Buffett admitted that not buying Google was one of his major mistakes. Alphabet was within reach—with profits from search and strong cash flows—while he watched from the sidelines. Now, as he prepares to hand over the CEO role, buying Alphabet shares is more than a “neat final move.” It’s a quiet signal of what he believes durable value in AI will look like.
For ordinary investors, the lesson is not “buy what Buffett buys.” It is that even the most traditional value investor wants exposure to AI—provided it’s embedded in a diversified, cash-rich platform that can be understood and rationally justified. Markets will continue to debate whether Alphabet is too expensive, too cheap or fairly priced. The better question is the same one Buffett has asked for seven decades: which companies can you hold through good times and bad, because you understand how they make money and why they can endure?
“Artificial intelligence remains one of the fastest-growing segments of the market, but it also stands out for high volatility, overheating risk and intense competition. The sector often reacts with sharp valuation swings, and the pace of innovation means market leaders can change quickly. Investments in stable assets outside the AI sector help maintain portfolio balance—even when sentiment toward innovation declines. That’s why, in the long term, it’s crucial to ensure diversification, combining bold exposure to new technologies with disciplined risk management,”
says Aleksander Mrózek, Key Client Relations Manager for the CEE region at Saxo Bank.
