Berkshire Hathaway Pours Billions into Alphabet Stock Amid AI Boom

Nvidia and Micron have been riding high on the AI trend, with Nvidia's stock up 1,290% since ChatGPT burst onto the scene in late 2022, and Micron's soaring 1,630%. However, there's another player that's quietly gaining traction: Alphabet.

Berkshire Hathaway, led by Warren Buffett, has been aggressively buying up Alphabet stock, with a position of around 106 million shares worth nearly $38 billion. This represents about 13% of Berkshire's total stock portfolio.

So what makes Alphabet an attractive AI investment? For one, the company is building the car, the roads, and even alternative engines for AI models. Google Search is a money-printing machine, while YouTube draws in billions of viewers. Additionally, Android sells smartphones and other consumer hardware globally.

But it's Alphabet's cloud division that's really gaining steam. In the first quarter, its revenue rose 63% year over year to $20 billion, with operating margins coming in at 33%. During the second quarter, sales from Google Cloud jumped 82% year over year to 24.8 billion, with an operating margin of 36%.

Alphabet's vertically integrated stack is what allows it to remain consistently profitable, even as it spends billions on capital expenditures. In fact, its companywide operating margin is around 34%, and moving upward.