Berkshire Makes Shocking $4.3 Billion Bet on Alphabet as Wall Street Warns AI Boom Could Collapse
Warren Buffett’s Berkshire Hathaway Makes a Big AI Bet Despite Fears of a Bubble
Wall Street has spent months warning that the artificial intelligence boom may be overheated and headed toward a painful correction. Yet one of the most influential investors in history is doing the opposite. Berkshire Hathaway revealed that it bought a massive stake in Alphabet, signaling strong confidence in the tech giant even as investors grow nervous about the sustainability of AI spending.
In a new regulatory filing, Warren Buffett’s conglomerate confirmed that it purchased 17.8 million shares of Alphabet during the third quarter. The stake, worth $4.3 billion at the end of September, was Berkshire’s largest new stock addition of the quarter. Alphabet shares immediately reacted, jumping nearly 4% in after-hours trading.
Why Berkshire Turned to Alphabet Now
Berkshire has admired Google for years. Back in 2019, Charlie Munger openly admitted he felt foolish for not investing earlier. At that time, Google’s dominance in search attracted their attention. But today, Alphabet is at the center of the global AI race, competing head-on with Amazon, Meta, and Microsoft—companies pouring staggering amounts of money into AI infrastructure.
Alphabet has rallied sharply this year, rising 46% even after the latest AI-driven market pullback. Despite fears that AI spending could outpace revenue growth, Berkshire’s move indicates long-term confidence in the sector.
It’s a significant reversal from Berkshire’s generally cautious approach to tech stocks, especially those tied to expensive, experimental innovations like AI.
AI Hyperscalers Are Spending Trillions
Morgan Stanley estimates that top hyperscalers—Alphabet, Amazon, Microsoft, and Meta—will invest $3 trillion in data centers and AI infrastructure by 2028. These companies are burning through capital at historic levels, much of it funded by debt. That has created deep concern on Wall Street about whether the AI boom is sustainable.
Still, Berkshire’s investment suggests the firm sees long-term value in the infrastructure-heavy future of AI, even if near-term volatility remains high.
Who Actually Made the Call?
Buffett is known for carefully considered, long-term value investments. But with his departure as Berkshire CEO looming at the end of the year, it’s not clear whether he personally made the decision to buy Alphabet shares. His successor, Greg Abel, along with other senior executives, also played roles in shaping the portfolio.
Buffett has already announced that he will no longer write annual shareholder letters or speak extensively at annual meetings. That silence means investors may never know who championed the Alphabet purchase.
Berkshire Still Playing Defense in Other Areas
Despite the big Alphabet buy, Berkshire continues to take a cautious overall position in the stock market. The company has been steadily selling off assets, including trimming its enormous Apple stake for more than a year. Its cash reserves have reached record highs—another sign that Buffett and his team expect market turbulence.
Last quarter marked the third straight year of net selling, even as Berkshire selectively added a few positions such as Chubb, Domino’s Pizza, Sirius XM, and Lennar. Berkshire also maintained its Amazon holdings, another investment tied to the AI boom.
A Rare Aggressive Move in a Time of Uncertainty
This unusual Alphabet buy stands out. Berkshire, known for disciplined value investing and resistance to hype cycles, is placing a major bet on a sector many analysts fear is overheating. The move suggests that while the AI boom may bring volatility, Berkshire believes the long-term potential outweighs the risks.
And when Berkshire takes a bold stance, the rest of Wall Street pays attention.
