Buffett's Bet on Alphabet: A $10 Billion Signpost
Berkshire Hathaway has increased its stake in Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) by 83%, making it the firm's third-largest position. This significant move by Warren Buffett's company gives investors reason to be confident in their own investments in Alphabet.
The timing of Berkshire's investment is particularly noteworthy, as it comes during Alphabet's transformation from a cash-return machine to a capital-intensive AI infrastructure builder. This shift has led some investors to question the valuation of Alphabet, which currently trades at a P/E of 16 and an earnings yield of 6.35%. However, Buffett's bet on Alphabet suggests that the company is undervalued.
Alphabet's growth has been accelerating, with Google Cloud growing 82% year over year in Q2 FY26 to $24.77 billion. Total revenue hit $119.8 billion, up 24.23%. The company also reported EPS of 9.11, extending a 12-quarter EPS beat streak.
Despite concerns about capital intensity and dilution risk, Buffett's investment in Alphabet suggests that the company is poised for long-term success. With a balance sheet that still carries the business, debt/equity sits at 0.143, interest coverage at 175.5x, and cash and equivalents at $55.91 billion.