Why Berkshire leaned into Alphabet
On Wednesday, Greg Abel sat down with CNBC's Becky Quick and made it clear Berkshire isn't guessing about AI's impact. "We have a lot of visibility from within our companies as to how we're using AI, what type of benefits it's delivering, so that brought incremental interest, and then we saw Google as a significant player," he said.
Abel said Berkshire moved into Google parent Alphabet roughly 15 months earlier, buying around $10 billion of stock with a 6.5% discount. "They hadn't set the size, but recommended that we consider 10 billion. And Warren and I discussed the size. We discussed the size of discount, and I'd recommended 6.5% discount, and we were comfortable with that," he said. "Then ultimately consummated the transaction."
How the position stacks up
Berkshire's buying spree in the second quarter totaled $17 billion of Alphabet shares, according to its Q2 portfolio snapshot filed with the SEC in August, making Alphabet the conglomerate's third-largest equity position. Those purchases were the biggest addition Berkshire made in the quarter.
As of the most recent filing, the firm holds around 106 million combined Class A and Class C Alphabet shares, valued at about $36.6 billion. Berkshire also bulked up elsewhere, raising its Delta Air Lines stake by 44%, or roughly $1.6 billion.
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The bigger AI spend and the payoff timeline
Google is one of five hyperscalers pouring money into data center capacity for AI, alongside Microsoft, Meta, Amazon and Oracle. Goldman Sachs estimates global hyperscaler capital outlays could run near $1 trillion in 2026, though it stresses there is a wide spread in projections.
"Estimates indicate that the commonly cited forecast for hyperscaler capex of $794 billion likely understates the total amount of global AI capex by around $200 billion. At the same time, the $794 billion figure likely overstates the amount of US investment in AI by $200 billion," a team at Goldman Sachs noted in an August analysis. In May they added, "A prolonged training-dominant phase extends the ROI timeline as CapEx and R&D continue to be deployed in advance of broad monetization."
For context, Alphabet's Class A shares were at 338.43, up 1.02% (+3.41), at 12:19 PM EDT. For everyday investors, the takeaway is simple enough: tech giants are spending heavily to lay AI's groundwork, and the revenue side may take time to catch up.
