Buffett's Berkshire Hathaway (BRK.A·BRK.B) Bets $41 Billion on Alphabet...Why?

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Berkshire Hathaway (BRK.A·BRK.B), led by Warren Buffett, has significantly increased its investment in Alphabet (GOOG·GOOGL) to approximately $41 billion, making a major bet on artificial intelligence (AI).

According to the US investment media outlet Motley Fool on July 4 (local time), Berkshire Hathaway held 68,462,015 shares of Alphabet Class A stock and 17,944,778 shares of Class C stock as of March 31. The value of these holdings amounts to $30.7 billion. Adding the $10 billion private investment announced on June 1, Alphabet's total investment swelled to approximately $41 billion.

Alphabet has become Berkshire Hathaway's third-largest investment among its publicly traded stocks, surpassing Coca-Cola (KO) and following Apple (AAPL) and American Express (AXP). Motley Fool cited Alphabet's strong business competitiveness as the primary reason for the investment. Alphabet's first-quarter revenue increased by 22% year-over-year to $110 billion, operating profit grew by 30%, and the operating profit margin reached 36%.

Alphabet's cash-generating ability was also evaluated as a favorable condition for Berkshire Hathaway. Alphabet generated $73 billion in free cash flow in 2025 and is investing capital in dividends and large-scale share buybacks. The network effects built by Google Search and YouTube were also cited as factors supporting the economic moats that Buffett has always emphasized.

The valuation is also not considered excessive. Since Berkshire Hathaway first purchased Alphabet shares in the third quarter of last year, the average price-to-earnings ratio over the past 12 months has been 26.6 times. This is slightly higher than the S&P 500 index's P/E ratio of 25 times. Motley Fool assessed that this premium could be justified considering Alphabet's business competitiveness.

The final investment rationale is AI. Alphabet plans to invest $180 billion to $190 billion in capital expenditures in 2026, and Chief Financial Officer Anat Ashkenazi stated that next year's investment scale will significantly increase. Alphabet has a business foundation across the entire AI value chain, from semiconductors and cloud computing to AI model development, advertising tools, and consumer applications. Motley Fool analyzed that Berkshire Hathaway's $41 billion investment reflects the judgment that Alphabet can generate sufficient returns from its massive AI investments.

[Article Summary]

-Berkshire Hathaway expanded its Alphabet investment to approximately $41 billion, making it its third-largest publicly traded stock investment.

-Alphabet reported $110 billion in first-quarter revenue, a 36% operating profit margin, and $73 billion in free cash flow in 2025.

-Motley Fool cited Alphabet's business competitiveness, valuation, and dominance across the entire AI value chain as the reasons for Berkshire Hathaway's investment.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*