Alphabet Inc.

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Bullish +75

Alphabet Is Berkshire Hathaway’s New Favorite Stock After Buying 48 Million Shares

AI-generated analysis

📈 Greg Abel breaks a 14-quarter streak of net selling by purchasing 48.1 million shares of Alphabet (GOOGL/GOOG) for $37.8 billion.

🏆 Alphabet becomes Berkshire Hathaway's third-largest holding, representing 10.2% of the total portfolio.

💰 The acquisition includes a separate $10 billion direct investment made in June to fund AI infrastructure.

📊 Alphabet trails only Apple ($70B) and American Express ($51.9B) in Berkshire's equity holdings.

🧠 Warren Buffett confirmed he originated the idea to buy Alphabet, which began in Q3 2025.

💵 Alphabet reported negative free cash flow last quarter but maintains $53 billion in trailing-12-month free cash flow.

📉 Berkshire Hathaway still holds $365.5 billion in cash, providing ample room for future investments.

🔄 Berkshire closed its Constellation Brands position and added a small stake in homebuilder D.R. Horton.

👤 Greg Abel now directs 94% of Berkshire's equity portfolio while Buffett remains involved in strategy discussions.

🚀 Alphabet retains dominant market positions in search, YouTube (2.7B monthly users), and Google Cloud.

Bullish Signals
  • Alphabet is acquired for $37.8 billion, vaulting it to Berkshire's third-largest holding and signaling strong institutional confidence.
  • Warren Buffett personally initiated the Alphabet investment, validating the company's long-term value proposition despite recent market volatility.
  • Alphabet maintains a trailing-12-month free cash flow of $53 billion, demonstrating resilient financial performance even with recent quarterly fluctuations.
  • The company holds dominant market positions in search and YouTube, reaching 2.7 billion monthly users, ensuring sustained revenue generation.
  • Berkshire's continued large cash reserve of over $365 billion indicates a strong balance sheet capable of supporting further strategic acquisitions.
  • Greg Abel's decision to deploy capital on Alphabet marks a significant shift from three years of net selling, highlighting a new bullish outlook.
Risk Factors
  • Alphabet reported negative free cash flow for the first time as a public company in the most recent quarter, warranting close monitoring.
  • The market is currently considered stretched by many investors, which could present valuation challenges if Alphabet's stock price continues to rise.
Full Analysis
Berkshire Hathaway has shifted its investment strategy under new CEO Greg Abel, breaking a 14-quarter streak of net selling to make a massive purchase of Alphabet stock. The filing reveals that Abel acquired 24.5 million shares of Class A (GOOGL) and 23.6 million shares of Class C (GOOG), totaling 48.1 million shares valued at $37.8 billion as of the quarter-end. This significant acquisition vaults Alphabet into Berkshire's third-largest holding, trailing only Apple and American Express. The combined stake now represents 10.2% of Berkshire's portfolio. This move follows a separate $10 billion direct investment made in June to fund Alphabet's AI infrastructure buildout, solidifying Alphabet's status as Warren Buffett's new favorite stock. The purchase signals a strategic pivot from cash hoarding to deploying capital into dominant market positions with strong free cash flow generation. Despite Alphabet reporting negative free cash flow for the most recent quarter, its trailing-12-month figure remains robust at $53 billion, with healthy operating margins and returns on equity that align with Buffett's long-term value investing principles. Warren Buffett confirmed he originated the idea to buy Alphabet, which Berkshire began accumulating in the third quarter of 2025. With Berkshire still holding over $365 billion in cash, this move demonstrates Abel's willingness to deploy capital on high-conviction opportunities, marking a clear departure from recent years of caution.