Andrew Bary
Berkshire Hathaway was late in buying Alphabet, but it is scoring nonetheless given the sharp rally in the operator of the leading search engine.
Berkshire bought 17.85 million of Alphabet's voting shares in the third quarter for what Barron's estimates was around $4 billion, or an average price of $225 a share. Recent moves in the stock suggest that Berkshire already is showing a 40% gain on its new investment.
Alphabet stock has been on a tear lately, buoyed by optimism about its use of artificial intelligence in its search business. The voting shares were up 5.7% to $316.65 Monday after hitting a record high in early trading. The stock is up 25% in the past month and over 50% in the last three months.
Alphabet has passed Microsoft to become the No. 3 company in market value in the U.S. stock market, behind Nvidia and Apple.
Berkshire's Alphabet stake is now worth about $5.6 billion, resulting in what Barron's estimates is a profit of more than $1.5 billion.
Berkshire Hathaway CEO Warren Buffett and former vice chairman Charlie Munger praised Alphabet at the 2017 Berkshire annual meeting, when the stock traded around $45, but the company waited until 2025 to buy shares.
Buffett used to provide the cost basis of the top 15 Berkshire equity holdings in his annual shareholder letter, but he stopped doing so without explanation after the 2021 letter. The omission makes it difficult to determine the cost basis of newer Berkshire investments.
Alphabet stock traded in a wide range of $174 to $254 in the third quarter. Barron's estimate of a purchase price of around $225 is based on the average price in the quarter and information in the company's latest 10-Q filing about the change in the cost basis of three groups of stocks in Berkshire's $300 billion equity portfolio.
It isn't clear whether Buffett, or either of the Berkshire investment managers Todd Combs and Ted Weschler, bought the Alphabet stock. Together, they run a total of about 10% of the Berkshire portfolio, with Buffett handling the rest.
Barron's best guess is that it was Combs or Weschler because of the relatively small size of the holding, the price, and the industry. Buffett's investments tend to be larger, at $8 billion or more, while Weschler and Combs' holdings are believed to often be at $4 billion or less. Two such smaller purchases, DaVita and Sirius XM Holdings, are both likely Weschler investments.
If Buffett had been buying Alphabet, he might have bought more than $4 billion of stock, an amount that might begin to move the needle at Berkshire. He is also less comfortable with technology investments than Combs or Weschler.
Buffett will be stepping down as CEO at year-end, making it less likely that he would have made a sizable investment in his final months at the helm
At the 2017 Berkshire annual meeting, Buffett talked about Alphabet's Google business in relation to Geico, Berkshire's auto insurer. "We were their customer very early on with Geico -- these figures are out of date, but as I remember, we were paying $10 or $11 a click," he said. "Any time you are paying somebody 10 or 11 bucks to punch a little thing, where you have no costs at all, that's a good business, unless someone will take it away from you."
Berkshire, Munger pointed out, had missed out on buying other stocks earlier. "We blew Walmart, too," Munger said. "It was a total cinch. We were smart enough to figure that out and didn't. Our worst mistakes have been mistakes of omission."
Write to Andrew Bary at andrew.bary@barrons.com
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(END) Dow Jones Newswires
November 24, 2025 11:49 ET (16:49 GMT)
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