Why Alphabet Stock Climbed Today
Key Points
Berkshire Hathaway disclosed a significant investment in Alphabet.
Google is gaining steam in the artificial intelligence (AI) race.
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Shares of Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) popped on Monday, following news that Warren Buffett's Berkshire Hathaway had taken a sizable stake in the internet search leader.
As of 3:25 p.m. EST, Alphabet's stock price was up about 3% after rising as much as 6% earlier in the day.
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Berkshire's buys boost investors' confidence in Alphabet's prospects
In a 13F form filed with the Securities and Exchange Commission (SEC) on Friday, Berkshire Hathaway revealed that it purchased more than 17.8 million shares of Alphabet in the third quarter. The investment conglomerate's stake in the tech giant was valued at over $4.3 billion as of Sep. 30.
It's unclear whether the purchases were made by Buffett himself or by his investing lieutenants Todd Combs and Ted Weschler, who oversee a portion of Berkshire's $300 billion public equity portfolio. But Buffett has long been a fan of Google, the crown jewel among Alphabet's businesses. So, the purchases likely have his blessing either way.
Alphabet's strengthening position within the AI arena
Coming into 2025, investors were concerned that the explosive growth of OpenAI's ChatGPT and other artificial intelligence (AI)-powered chatbots could wrestle away search market share from Google. Yet Alphabet's stock price has rallied in recent months, as its own AI initiatives have driven search clicks and boosted its fast-growing cloud computing operations.
It also doesn't hurt that Alphabet is one of the more reasonably valued AI leaders. The tech titan's shares currently trade for about 25 times its projected earnings in 2026.
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Joe Tenebruso 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.
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