Warren Buffett Just Said This About Berkshire Hathaway's Massive Google Investment

Written by Brett Schafer for The Motley Fool->

Warren Buffett initiated the Berkshire Hathaway investment in Alphabet.

Alphabet is benefiting tremendously from the artificial intelligence boom.

Shares of the stock still trade at a reasonable price.

Warren Buffett officially retired as CEO of Berkshire Hathaway (NYSE: BRKB)(NYSE: BRKA) at the end of 2025 and is now just the chair of the board. At 95 years young, many investors assumed that Buffett would not be making any more investment decisions, delegating his previous capital allocator role to new CEO Greg Abel and the range of leaders at the business.

This is not the case. In an interview with CNBC, Buffett said he personally initiated Berkshire's latest investment in Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), the parent company of Google, YouTube, and Google Cloud, which is now one of the largest stock positions in the Berkshire Hathaway portfolio.

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Here's exactly what Buffett said, and what it means for the future of Berkshire Hathaway.

Depending on the day, Berkshire Hathaway's investment in Alphabet is worth around $30 billion. This includes its direct stock purchases, as well as a $10 billion private placement in June 2026 as part of Alphabet's capital raise.

Many assumed that Greg Abel made the capital allocation decision for these Alphabet investments. While he still has the final say as the CEO, Buffett was the one who initiated the idea for Berkshire, according to his latest interview with CNBC. He made it clear that he and Abel are on the same page, but Buffett is not sitting on the sidelines entirely when it comes to capital allocation for the conglomerate he spent decades building.

Even though Alphabet is now a Berkshire position worth tens of billions, Buffett said there are still four or five other stocks Berkshire owns that he likes as better businesses. These are likely the conglomerate's largest positions, such as Apple, Coca-Cola, and American Express.

Berkshire's investment in Alphabet is not necessarily because it is a winning artificial intelligence (AI) stock. Buffett said it was to make up for the mistake of not investing in the owner of Google Search earlier in its life as a publicly traded company, especially when some of Berkshire Hathaway's subsidiaries, like Geico, were heavy users of its advertising services.

Now, Alphabet has the opportunity to deploy hundreds of billions of dollars in capital over the coming years to retain its position as a leading internet platform and, increasingly, an AI player. The company is still seeing strong revenue growth from Google Search while benefiting from spending on its Google Cloud infrastructure services and the Gemini chatbot.

Overall revenue grew 22% year over year last quarter, an astounding rate of growth for a business of Alphabet's size. Similar levels of growth are expected in the upcoming quarterly earnings, which will be released on July 22 after the stock market closes.

Alphabet has extended its growth runway by investing heavily in AI. For example, Google Cloud is now growing revenue at a 60% year-over-year rate, hitting $20 billion in sales just last quarter. This has supercharged Alphabet's share price, which is up 81% in the last 12 months alone. In the last 10 years, Alphabet has produced a cumulative total return of 846%.

Even though it now trades at a market cap of $4 trillion (or higher, depending on the day), the stock still trades at a reasonable multiple of earnings. Alphabet has a price-to-earnings ratio (P/E) of 26, which is below many of the other large technology players, and is actually below the current S&P 500 average of 29.

The company needs to continue growing to justify this valuation, but you might not find a better big-tech stock to buy than Alphabet right now.

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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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