What Berkshire's huge wager on Alphabet says about Warren Buffett's post-CEO role

Warren Buffett is the chairman and former CEO of Berkshire Hathaway. Warren Buffett may no longer be Berkshire Hathaway CEO, but its Alphabet wager has all his hallmarks. Berkshire's third-largest stock bet on June 30 was an almost $38 billion stake in the tech titan. Berkshire recently reported its biggest quarter for stock purchases and buybacks in years. Warren Buffett has left the stage at Berkshire Hathaway, but he may still be pulling strings from behind the curtain. The legendary investor, who ended his six-decade run as Berkshire's CEO at the turn of the year, is likely responsible for building the company a huge Alphabet stake from scratch in under 12 months. Berkshire owned about 106 million Alphabet shares worth nearly $38 billion at the end of June, its quarterly portfolio update revealed on Friday. Buffett, who turns 96 later this month, said in a July interview that he initiated the position during the third quarter of 2025. It was Berkshire's third-largest stock holding on June 30, behind only Apple and American Express. Buffett may have handed Berkshire's reins to Greg Abel, but given his comments and the sheer scale of the Alphabet stake, it seems likely that he's involved with what could be the final major investment of his career. David Kass, a finance professor at the University of Maryland who blogs about Berkshire, told Business Insider that he believes Buffett is "still largely managing Berkshire's stock portfolio" along with his investment manager, Ted Weschler. "He comes into the office every day, and investments are his primary interest," Kass said. Berkshire Hathaway did not immediately respond to a request for comment. The appeal of Alphabet Alphabet's $4.2 trillion market capitalization makes it one of the world's most valuable companies. Its stock price has jumped nearly 70% over the past year, and has more than tripled since May 2023, as investors have wagered it will be one of the biggest victors of the AI boom. Buffett told CNBC in July that Alphabet was "more likely to be a winner based on their record than probably 95% of what gets merchandised through Wall Street." But he also flagged the hundreds of billions of dollars that Alphabet and its peers are pouring into the AI infrastructure buildout. "That's real money," he said. "That's the game they're playing now." Buffett has historically eschewed tech companies as they're outside his circle of competence, often trade at sky-high valuations, and he finds it hard to gauge their long-term prospects given the fast pace of progress and fierce competition in the tech industry. It's not fully clear why the "Oracle of Omaha" — who refrained from spending Berkshire's cash on stocks, acquisitions, and buybacks for years because they didn't strike him as offering good value for money — decided it was finally time to bet big on Alphabet. "Buffett probably believes that Alphabet's size and leadership role in search, advertising, the cloud, and YouTube provide a moat or a durable competitive advantage," Kass said. Michael Burry, the investor of "The Big Short" fame, labeled Alphabet the "value investor's favorite" in a rare podcast interview last December. Buffett made Apple the cornerstone of Berkshire's stock portfolio after determining it was fundamentally a consumer-electronics company, and realizing how indispensable its products were to its customers. Firing on all cylinders Ramping up the Alphabet position, partly through a $10 billion private placement at a discount to the market price in June, was one of several proactive moves by Berkshire last quarter. The owner of Geico, Fruit of the Loom, and the BNSF Railway purchased a net $23.5 billion of stocks in three months, largely thanks to its Alphabet wager. It had been a net seller of stocks in each of the previous 14 quarters, dating back to 2022. At the same time, Berkshire repurchased $4.5 billion of its stock, marking its biggest quarter for buybacks since 2021. Buffett didn't buy back a single share for 18 months prior to this year. Berkshire also struck a deal in May to buy homebuilder Taylor Morrison for $8.5 billion in cash. The transaction closed in late July, after the second quarter ended. The surge in stock purchases and buybacks helped trim Berkshire's cash pile from a record $380 billion to $365 billion during the three months ending June 30. Buffett nearly tripled the cash hoard during his final three years in charge, as the bargain hunter struggled to find value in a historically expensive market. What's behind the resurgence? It's not clear why Berkshire ramped up its cash deployment last quarter. Valuations didn't crash to levels that would spur Buffett into action. Given how closely Abel consults with Buffett, and how deeply involved Buffett remains at Berkshire, it's hard to imagine Abel alone decided to throw the company into high gear and revamp its stock portfolio by making Alphabet a top-three holding. It's possible that Buffett reassessed what good value is in this market, especially when Berkshire's coffers are bulging, resulting in Alphabet stock and buybacks passing his sniff test. "Berkshire was too conservative over the past three years with the S&P 500 increasing by an average of about 23% per year," Kass said. "Perhaps Buffett is acknowledging that the current market environment still provides an attractive long-term entry point for a company like Alphabet that has a large potential for growth," he added. Whatever the explanation, it's exciting to see Buffett and Berkshire finally putting a chunk of their cash to work. Read the original article on Business Insider

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