Alphabet Inc., the parent company of Google, saw its shares surge nearly 6% to a record high on Monday following Berkshire Hathaway’s announcement of a $4.93 billion stake in the tech giant. This investment, comprising 17.85 million shares, marks a rare foray into the technology sector by Berkshire, a conglomerate historically cautious about tech investments. The move is seen as a significant endorsement of Alphabet’s artificial intelligence (AI) initiatives amidst growing concerns of a potential tech bubble. Warren Buffett, Berkshire’s legendary investor, has long favored consumer-focused companies like Apple, making this investment a notable shift in strategy. Analysts suggest that Alphabet’s strong fundamentals, including its robust AI infrastructure, early adoption of AI search tools, and massive advertising revenue, align with Berkshire’s value-investing philosophy. The purchase also addresses Buffett’s regret over missing early opportunities in Google. Alphabet’s shares have risen nearly 14% in the December quarter, making it the best-performing member of the ‘Magnificent Seven’ tech stocks this year. The company’s valuation, at 25 times forward earnings, is lower than peers like Microsoft and Nvidia, further enhancing its appeal. Berkshire’s investment has sparked renewed interest in Alphabet among retail investors, with the stock trending highly on platforms like Stocktwits. Despite this move, Berkshire remains a net seller of equities, with its cash reserves reaching a record $381.7 billion, signaling Buffett’s cautious stance on current market valuations.
Alphabet shares hit record after Berkshire makes rare tech bet with $4.9 billion stake
