Buffett's Berkshire Breaks Tech Aversion, Bets $4.9B on Alphabet's AI Push

Warren Buffett's Berkshire Hathaway Inc. has taken a $4.9 billion stake in Alphabet Inc., marking a significant shift in the conglomerate's investment strategy as it navigates the transition of leadership from its 95-year-old CEO to Greg Abel. The move, disclosed in a 13F filing, saw Berkshire acquire 17.9 million shares of the Google parent, representing 0.31% of its outstanding stock according to the filing. Alphabet's shares surged 1.7% in extended trading following the announcement according to market data, reflecting investor confidence in the tech giant's AI and cloud initiatives.

The investment contrasts with Berkshire's traditional aversion to high-growth technology stocks, a caution Buffett has long maintained. While the conglomerate has held Apple Inc. as its largest equity position for years, it reduced its stake in the iPhone maker by 15%, leaving a $60.7 billion position. Buffett has previously criticized Apple as a consumer-products company rather than a pure tech play according to his public statements. The shift toward Alphabet underscores a broader reallocation of Berkshire's capital according to financial reports.

Berkshire's third-quarter portfolio also saw exits and reductions. The company sold its entire position in homebuilder D.R. Horton Inc. and trimmed stakes in Bank of America Corp. and Verisign. Conversely, it increased holdings in Sirius XM Holdings Inc., insurer Chubb Ltd., and Domino's Pizza Inc., signaling a focus on sectors with stable cash flows according to portfolio analysis.

The Alphabet investment aligns with Buffett's acknowledgment of past missteps in tech. In 2019, he admitted missing the opportunity to invest in Google earlier, stating, "We screwed up". The timing of the stake also coincides with Alphabet's $40 billion AI data center expansion in Texas according to company reports, reinforcing its appeal as a long-term bet in an AI-driven economy.

Buffett, who steps down as CEO at year-end, has been actively deploying cash ahead of the transition. Recent moves include a $9.7 billion acquisition of Occidental Petroleum Corp.'s petrochemical business and a $1.6 billion stake in UnitedHealth Group Inc. according to the announcement. The Alphabet investment, now Berkshire's 10th-largest equity holding, highlights the firm's evolving approach under Combs and Weschler, who have been more aggressive in tech opportunities according to investment analysis.

Shares of Alphabet climbed 5% in premarket trading on Monday according to market data, buoyed by the news and broader optimism around AI adoption. However, the stock remains a small portion of Berkshire's portfolio at 1.6% according to portfolio analysis, reflecting a cautious bet in a sector Buffett has historically viewed with skepticism.