Berkshire Hathaway has dramatically increased its investment in Google parent Alphabet, turning what was once an unusual technology bet for Warren Buffett’s conglomerate into its third-largest stock holding.
Berkshire increased its Alphabet position by 83% during the second quarter, ending June with nearly 106 million shares worth about $37.8 billion.
That puts Alphabet behind only Apple, valued at roughly $66 billion in Berkshire’s portfolio, and American Express at $51.3 billion.
The size of the investment is significant, but the timing may be even more important.
Berkshire spent 14 consecutive quarters selling more stocks than it purchased as it accumulated one of the largest cash piles in corporate America. That changed sharply during the second quarter, when the company purchased $23.5 billion of stocks while selling just $3.7 billion.
Alphabet was at the center of that shift.
The investment also gives Berkshire exposure to considerably more than Google’s search and advertising businesses. Alphabet is spending heavily on artificial intelligence and data-center infrastructure while holding one of corporate America’s most extraordinary outside investments.
Alphabet invested roughly $900 million in Elon Musk’s SpaceX in 2015. By the end of June, that stake was valued at approximately $94 billion — more than 100 times the original investment.
In other words, Berkshire is putting tens of billions of dollars behind a company that has itself demonstrated an ability to turn an early strategic investment into nearly $100 billion of value.
The move also marks an important chapter in Berkshire’s transition from Buffett to Chief Executive Greg Abel. Buffett has said the original decision to invest in Alphabet was his, while capital allocation is now being managed under Abel’s leadership.
For Berkshire shareholders, the bigger message is where the conglomerate is finally willing to put some of its enormous financial firepower.
After years of accumulating cash and struggling to find investments large enough to meaningfully move Berkshire, Alphabet has become one of the few companies receiving tens of billions of Berkshire dollars.
That makes the investment more than another portfolio adjustment.
Alphabet is now one of Berkshire Hathaway’s biggest bets.
JBizNews Desk | Omaha
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