Berkshire Hathaway Makes a Major Bet on Alphabet as Top Holding

Key Points

Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) has maintained a remarkably consistent top-five portfolio over the past four years, typically holding Apple, Bank of America, American Express, Coca-Cola, and Chevron. However, this stability was disrupted last quarter when Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) broke into the top five, pushing Chevron out of the ranking.

CEO Greg Abel and his team made a substantial bet on the technology giant, adding 24.5 million shares of Alphabet in Q2 according to the Berkshire Hathaway 13F filing—a 45% increase in their stake. Berkshire now holds approximately 79 million shares of Alphabet, the parent company of Google, valued at around $28.2 billion. This represents 9.41% of the total portfolio, making it the fourth-largest holding behind Apple (22%), American Express (17%), and Coca-Cola (11%).

Image source: Getty Images.

Capex concerns

Berkshire Hathaway did not hold any Alphabet shares until Warren Buffett initiated a position of nearly 18 million shares for $4.4 billion in Q3 2025. The company subsequently added 36 million shares in Q1 and another 24.5 million in Q2.

While Alphabet stock has returned roughly 37% over the past year, shares have declined approximately 7% over the last month. The company delivered a robust second quarter, with revenue rising 24% year-over-year to $120 billion and operating income increasing 30% to about $41 billion.

Investor anxiety centers on AI spending and cash flow erosion. To meet rising cloud demand, Alphabet raised its annual capital expenditure guidance to $195 billion to $205 billion, up from $180 billion to $190 billion. This spending spree resulted in a negative free cash flow of $5.8 billion for the quarter, the first such quarter since the company’s IPO.

“We expect the free cash flow will remain under pressure driven by our investments in technical infrastructure, which enables us to capitalize on the AI opportunity and continue to drive attractive returns,” CFO Anat Ashkenazi stated on the earnings call.

The Amazon parallel

Amazon faced a similar market reaction earlier this year, but argued it needed to invest heavily to build future capacity. Amazon’s strategy has since paid off, with the stock surging post-earnings on stronger cloud revenue.

The recent decline in Alphabet’s stock price has brought its valuation down to 16 times earnings, an attractive entry point for a firm like Berkshire that seeks quality companies at reasonable prices. Alphabet remains the dominant leader in internet search and a premier cloud computing stock.

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