Berkshire Hathaway Boosts Alphabet Stock Amid AI Boom Concerns
Fears surrounding the artificial intelligence (AI) boom have gripped Wall Street, yet Berkshire Hathaway is doubling down on its investment in tech. The conglomerate, led by Warren Buffett, disclosed in a regulatory filing that it acquired 17.8 million shares of Alphabet, Google’s parent company, during the third quarter of the year.
Berkshire Hathaway’s Significant Investment in Alphabet
The purchase of Alphabet shares is substantial, valued at approximately $4.3 billion by the end of September. This acquisition represents Berkshire’s largest stock investment in the last quarter and contributed to a 4% increase in Alphabet’s stock during after-hours trading.
Broader Investment Strategy
In addition to Alphabet, Berkshire Hathaway diversified its portfolio by purchasing shares in companies like Chubb, Domino’s Pizza, Sirius XM, and Lennar. Despite the AI market’s volatility, Alphabet’s stock has surged 46% this year, a testament to its strong position in the tech sector.
The AI Investment Landscape
Alphabet, alongside other major players like Amazon, Meta Platforms, and Microsoft, is heavily investing in AI, with significant capital allocated for data centers and infrastructure. According to Morgan Stanley, these AI hyperscalers are expected to invest around $3 trillion through 2028. However, this aggressive spending, primarily financed through debt, has raised concerns among investors regarding sustainable revenue and profitability.
Market Perspectives and Berkshire’s Future
As Berkshire Hathaway prepares for a transition in leadership—with Buffett stepping down by the end of the year—there are uncertainties about who approved the Alphabet stock acquisition. Warren Buffett recently announced he intends to take a step back from public engagements, including the annual report and shareholder meetings.
Despite these changes, Berkshire’s cautious approach to the market is evident. The firm has amassed a significant cash reserve, highlighting a decline in overall stock portfolio value due to consistent net selling over the past three years. This includes a continued reduction of shares in Apple, indicating a strategic pivot as Buffett’s tenure comes to a close.
- Alphabet shares purchased: 17.8 million
- Investment value at end of September: $4.3 billion
- Other investments: Chubb, Domino’s Pizza, Sirius XM, Lennar
- Alphabet’s stock increase in 2023: 46%
- Estimated AI infrastructure investment by hyperscalers through 2028: $3 trillion
