For nearly 60 years, investors have measured themselves against one benchmark: Warren Buffett. Since taking control of Berkshire Hathaway (NYSE:BRK-A | BRK-A Price Prediction)(NYSE:BRK-B) in the mid-1960s, Buffett turned a struggling textile mill into a $1 trillion empire while delivering returns that left the broader market in the dust. According to Berkshire’s annual reports, the company generated compounded annual gains of roughly 19.8% from 1965 through 2025, versus about 10.4% annually for the S&P 500.
That difference sounds small until you run the math. A $10,000 investment in Berkshire in 1965 would be worth about $600 million today. The same investment in the S&P 500 would have delivered about $4.5 million — excellent, just nowhere close to Buffett.
So when Buffett makes a major move, Wall Street pays attention. And one of his last tech bets is already rewarding shareholders in a big way. Alphabet (NASDAQ:GOOGL) is up approximately 60% since the purchase was revealed in mid-November.
Buffett’s Long-Awaited Embrace of Big Tech
For decades, Buffett stayed far away from technology stocks. His reasoning was simple: he preferred businesses he could easily understand and predict. Coca-Cola (NYSE:KO), American Express (NYSE:AXP), and See’s Candies fit that mold. Early Silicon Valley did not.
That changed in 2016 when Berkshire began building its now-famous stake in Apple (NASDAQ:AAPL). Buffett later called Apple “probably the best business I know in the world.” At one point, Apple represented roughly half of Berkshire Hathaway’s entire equity portfolio.
Yet even after Buffett spent the last two years trimming the position, Apple still accounts for about 19.5% of the portfolio’s total. In mid-November, Alphabet was revealed, with Berkshire owning roughly 17.8 million shares. While initially worth $4.3 billion, that stake has ballooned to over $7 billion as of May 2026.
The “Cloud AI” Inflection Point
Alphabet’s latest Q1 2026 earnings report, released April 29, provided the fundamental fuel for this surge. While critics once feared AI would destroy search margins, Alphabet proved the opposite. Google Cloud revenue surged 63% to $20 billion, marking a historic inflection point where enterprise AI solutions became a primary revenue driver.
Operating margins also expanded to 36.1%, signaling that the company is scaling its infrastructure with massive efficiency. For a value investor like Buffett, this expansion of the “moat” during a period of technological disruption is exactly what justifies a multi-billion dollar entry.
Buffett’s “Final” Tech Bet and the Successor Strategy
Most Berkshire watchers believe Buffett’s investing lieutenants Todd Combs or Ted Weschler likely initiated the Alphabet purchase. This transition is significant as Warren Buffett officially stepped down as CEO at the end of 2025. This “parting gift” reflects a broader evolution of the Berkshire portfolio under new leadership, which is currently sitting on a record $397.4 billion in cash reserves.
Alphabet is trading near $400.80 as of early May, and the timing looks brilliant. Surprisingly, part of that jump came immediately after disclosure, as investors rushed to mirror Berkshire’s move, proving that the Buffett endorsement still carries weight in the Abel era.
Alphabet Performance Snapshot (Q1 2026)
| Metric | Performance | Investor Significance |
|---|---|---|
| Google Cloud Revenue | $20.0B (+63% YoY) | Transitioned from a search adjunct to a core profit engine. |
| Operating Margin | 36.1% | Highest in years; reflects massive AI cost efficiencies. |
| Quarterly Dividend | $0.22/share | A 5% increase; fits Buffett’s preference for returning capital. |
Alphabet’s Business Keeps Delivering
Alphabet’s latest results reinforced why it remains a classic moat-driven business. It still controls roughly 90% of global online search, proving that AI Overviews are increasing query volume rather than cannibalizing it. YouTube remains the dominant streaming video platform, and Android powers billions of devices worldwide.
Buffett was never chasing hype. Instead, he looks for durable competitive advantages and massive cash generation. Alphabet checks every one of those boxes, while waiting for a broader market pullback to deploy Berkshire’s nearly $400 billion “elephant gun.”
Key Takeaway
Alphabet continues generating hundreds of billions in annual revenue and tens of billions in free cash flow. Yet its valuation still remains attractive compared to many fast-growing AI peers. Whether it was Buffett, Combs, or Weschler who first pulled the trigger, they spotted a dominant technology platform trading like a mature utility—and once again, they were right.
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