As it turned out, it was Warren Buffett who was to thank for Berkshire Hathaway‘s (NYSE:BRK.B | BRK.B Price Prediction) big bet in Alphabet (NASDAQ:GOOG). And while the great Oracle of Omaha may have wished he’d gotten the legendary conglomerate into the AI blue-chip far sooner in the game, I think it’s far better late than never, especially when it comes to a company that’s already shown it knows how to generate serious alpha over the long haul.
Indeed, if you’re surprised that Warren Buffett himself would choose Alphabet, you’re definitely not alone, given the man’s long-time hesitance when it comes to stocks within the technology sector.
The next great Warren Buffett bet after Apple?
Now that we’ve got more clarity that Buffett himself made the move, as he admitted in a sitdown with CNBC’s Becky Quick, the big question is whether Alphabet is about to take the throne away from Apple (NASDAQ:AAPL) as the largest holding within the Berkshire Hathaway public portfolio.
As it turned out, trimming Apple shares over the years wasn’t the optimal call, especially with the iPhone maker blasting off to new all-time highs while much of the Magnificent Seven are still some percentage off their highs. And while Buffett still had high praise for the Cupertino-based giant, which is poised to deliver Siri AI in a matter of weeks, the valuation is a giant question mark right now. After soaring 35% in six months, Apple now trades for more than 40.0 times trailing price-to-earnings (P/E).
That’s the most expensive that Apple has been in a very long time, and prospective new buyers are right to question the higher price of admission, even given the catalysts on the horizon and the big CEO change that’s also just weeks away.
Indeed, Alphabet’s Google is to thank for helping Apple get up to full speed in the AI race with its latest Apple Foundation Models. And while Apple has seemingly found a smart shortcut to close the gap in the AI race, I do think that investing in the firm behind the profound AI lab also makes a lot of sense, especially since frontier enterprise-grade AI and consumer AI are completely different ballgames.
Alphabet certainly seems mispriced as investors ponder its position in the AI race
While Berkshire started buying quite a while ago, I still view Alphabet stock as far easier to justify at 26.9 times trailing P/E, especially after the latest 5% intraday decline surrounding delays for Gemini 3.5 Pro, which should have been launched last month.
On the surface, the delay feels like Google is losing its luster in this AI race when, in reality, the company is probably just taking its time to ensure sufficient polish on an advanced AI model that could change the game. Delays are never fun, but if Google has taught us anything in this multi-year AI race, it’s that it’s a wonderful company that’s worth the wait.
In any case, I think covering both bases in AI (consumer with Apple, frontier with Google) makes the most sense. It doesn’t have to cost a fortune to get these sought-after seats to the AI revolution.
No IPO-chasing needed.
At the end of the day, Google is an AI powerhouse that could surprise with its coming release, even if it’s dubbed as losing some spots in the AI leaderboard until it can finally release Gemini 3.5 Pro. In my view, a month or so of delay is nothing in the grander scheme of things. Personally, I think delays are good news, given that Google knows the risks of pushing something out the door that isn’t up to standards.
The bottom line
While time will tell how Alphabet shares fare for Berkshire in the AI age, I do think it could be one of Warren Buffett’s last brilliant, needle-moving stock picks, one that I believe has a chance to match the big move in Apple over the past decade.
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