Warren Buffett’s Berkshire Hathaway More Than Triples Its Share in Alphabet
Quick Learning
-
Berkshire Hathaway (BRK-B) tripled its stake Alphabets (GOOGL) to $16.6 billion during Q1 while holding $397.6 billion in cash and liquidating positions in 16 stocks including UnitedHealth and Visa. Alphabet generated $64.4 billion in free cash flow over the past 12 months and saw Google Cloud revenue grow 63% year over year with operating income from the cloud tripling to $6.6 billion.
-
Berkshire’s leadership is preparing for the recession by raising cash and cutting holdings, yet they chose to increase their Alphabet position significantly because the company combines AI leadership with an already profitable, cash-generating advertising business that can fuel growth even during a recession.
-
The analyst who called NVIDIA in 2010 recently named his top 10 stocks and Google was not one of them. Get them here for FREE.
Money is king again on Wall Street. As fears of a recession linger, interest rates remain elevated, and consumers show signs of weariness, corporate America is bracing for bad weather ahead. Few companies have prepared more aggressively Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B). The conglomerate ended the first quarter sitting on a cash pile of $397.6 billion, according to its latest earnings release and SEC filing.
That raises an obvious question: If Berkshire is offering shares almost everywhere else, why is it buying so much Alphabets (NASDAQ:GOOG)(NASDAQ:GOOGL)? And not just a little bit more, either. Berkshire tripled its stake in Alphabet in the first quarter while at the same time reducing exposure to sectors that often struggle during recessions.
Here are the numbers that show us.
The analyst who called NVIDIA in 2010 recently named his top 10 stocks and Google was not one of them. Get them here for FREE.
Berkshire’s Portfolio Purge Sends a Message
Berkshire’s most recent 13-F filing with the SEC looked less like standard portfolio management and more like spring cleaning with a light bulb.
Under the new leadership of Greg Abel, Berkshire eliminated positions in 16 stocks altogether, including UnitedHealth Group (NYSE: UNH), Visa (NYSE:V), MasterCard (NYSE:MA), Domino’s Houses (NYSE:DPZ), Diageo (NYSE:DEO), and what’s left of it Amazon (NASDAQ:AMZN) stake.
During that time, Berkshire continued to cut a number of long-term assets closely tied to economic activity, including Constellation Brands (NYSE:STZ) by 95%, Bank of America (NYSE:BAC), Chevron (NYSE:CVX), and Nucor (NYSE:NUE).
No matter how you look at it, this was one of the biggest portfolio cleanups Berkshire has done in years. Amazingly, however, Abel wasn’t just hoarding money under the company’s mattress.
Berkshire Goes on Buying Bullets
While Berkshire was selling most of its portfolio, it significantly increased its investment in Alphabet. According to the 13-F filing, the company increased its holdings in Alphabet’s Class A (GOOGL) shares to 54.2 million shares valued at approximately $15.6 billion. Berkshire also bought 3.6 million Class C shares (GOOG), worth about another $1 billion.
That brings Berkshire’s Alphabet’s total investment to about $16.6 billion, making it one of the five largest positions in the portfolio.
In other words, Berkshire sees Alphabet as both defensive and growth-oriented — a rare combination. The logic is not hard to see.
Alphabet generated $64.4 billion in free cash flow over the past 12 months, while sitting on $126.8 billion in cash and marketable securities. Even as the economy slows down, Google’s advertising machine continues to generate huge cash flow.
At the same time, Alphabet has become one of the leaders in artificial intelligence. Its Gemini AI platform now competes directly with offerings from Microsoft (NASDAQ:MSFT) and OpenAIwhile Google Cloud revenue rose 63% year over year in the most recent quarter. Operating income from the cloud division tripled to $6.6 billion.
It suggests Abel may be worried about the next 12 months economically, but he apparently believes Alphabet can continue to grow regardless.
Why Small Investors May Want to Own Brands
Granted, Alphabet stock is no longer cheap by historical standards. Shares are up 25% year to date and 138% over the past year. Even so, compared to other AI leaders, Alphabet remains incredibly intelligent.
|
Company |
Forward P/E Ratio |
1 Year Benefit |
|
Alphabets |
~27 |
138% |
|
Microsoft |
~22 |
-7% |
|
Nvidia (NASDAQ:NVDA) |
~20 |
67% |
|
Amazon |
~26 |
29% |
Alphabet also repurchased $7.7 billion worth of stock last year and recently initiated a dividend, which now yields about 0.2%. That won’t make income investors rich, but it shows management’s confidence in strengthening their income generation.
That’s important because the use of AI is exploding. Many companies are investing billions without producing a meaningful profit yet. Alphabet already has both — the rapid growth of AI and the mature business of printing money.
In any case, investors should be aware of the risks. Regulatory pressure remains intense in the US and Europe, competition for AI is increasing, and advertising budgets may weaken during a recession.
That said, the Berkshire buying spree suggests Abel believes those risks are manageable compared to Alphabet’s long-term benefits.
Key Takeaway
Berkshire Hathaway’s latest moves tell a very clear story. Abel appears to be cautious about the economy, helping to explain the nearly $400 billion in cash reserves and a sweeping portfolio that cuts across banking, industrial, energy and consumer-facing businesses. But you’ve still found one place worthy of posting billions: Alphabet.
For small investors, that’s worth paying attention to. Alphabet includes AI leadership, great free cash flow, a strong balance sheet, and a still attractive valuation considering the growth trajectory. Even if the economy slows later this year, Alphabet looks poised to continue generating cash while expanding its role in AI.
Berkshire’s message seems simple enough: if you’re going to own growth in uncertain times, own companies that already fund the future with today’s profits.
The analyst who called NVIDIA in 2010 recently named his top 10 AI stocks
This analyst’s 2025 pick is up 106% on average. He recently named his top 10 stocks to buy in 2026. Get them here for FREE.
