Berkshire Hathaway Holds a $28 Billion Stake in Alphabet, and Warren Buffett Says He Initiated It

As of March 31, Berkshire Hathaway (NYSE: BRKB) (NYSE: BRKA) owned a combination of Class A and Class C shares of Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). This combined position is currently valued at $28 billion, easily making it one of the conglomerate's top holdings. This includes the equity purchase as part of Alphabet's $85 billion raise in June.

When Berkshire Hathaway first bought the "Magnificent Seven" stock in the third quarter last year, it was viewed as a surprise move among the investment community. The Omaha company had been known not to dabble in the technology space.

The market just received new info that might lead to more astonishment. In a recent interview with CNBC, Warren Buffett said that he was the one who initiated the Alphabet stake.

Image source: The Motley Fool.

Buffett is bullish on AI

Look through Berkshire Hathaway's holdings, and you'll see financial services, energy, and consumer businesses are featured prominently. These have long been in the Oracle of Omaha's circle of competence. Alphabet appears to now fit squarely in this area of expertise.

Buffett was first drawn to the quality of Alphabet's operations over a decade ago, when GEICO was paying the internet powerhouse for advertising. Of course, it took several years for the legendary investor to finally make a purchase decision. And the timing shines a light on his thinking.

"Find businesses that are going to earn high returns on capital for an extended period of time," Buffett said during in the latest interview. Investors should read between the lines.

There is no question more important in the markets and economy today than the uncertainty around the ultimate payoff the hyperscalers will register from their unprecedented levels of spending. Berkshire Hathaway and Warren Buffett, however, are bullish on artificial intelligence (AI).

And more specifically, the conglomerate is making a bet that Alphabet will earn adequate returns on its enormous capital expenditures (capex), which are now expected to total $200 billion (at the midpoint) in 2026. Otherwise, Buffett wouldn't be a buyer.

"We continue to expect our capex to increase significantly in 2027," chief financial officer Anat Ashkenazi said on the Q2 2026 earnings call.

Shares look cheap

Retail and professional investors pay very close attention to what Warren Buffett says and does. Berkshire's sizable Alphabet position is a clear vote of confidence for the AI buildout. If there was an opportunity to buy the tech giant, now looks like a good time.

It's crazy to think that a company with a massive $3.9 trillion market capitalization, one that is so closely watched, can actually be undervalued. But this might be the case with Alphabet. As of this writing, the AI stock trades at a forward price-to-earnings ratio of 22.5, a compelling entry point for an elite business.

The market might be worried about ever-increasing AI spending. Buffett isn't.

Neil Patel 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.