Berkshire Hathaway’s disclosure of a multibillion-dollar stake in Alphabet (about 17.9 million shares as of Sept. 30, roughly $5 billion at current prices) has helped accelerate a >50% YTD rally that has the stock near record highs and is widely read as an endorsement of Alphabet’s AI push. Alphabet reported a strong Q3 — revenue up 16% to $102.3 billion, Google Services +14% to $87.1 billion, Cloud +34% to $15.2 billion, net income +33% to ~$35 billion and EPS $2.87 — and generated $24.5 billion of free cash flow in the quarter and $73.6 billion over the prior 12 months, while holding $98.5 billion in cash and marketable securities. Management has raised 2025 capex guidance to $91–93 billion to build AI infrastructure, which supports continued growth but concentrates execution and margin risk from heavy spending and future depreciation; at a P/E around 28 despite the run-up, the stock looks attractively priced to investors willing to accept the capital-intensity risk.
Berkshire Hathaway's Nov. 14 disclosure of a roughly 17.9 million-share position in Alphabet (13F shows ownership as of Sept. 30) — worth about $5 billion at current prices — materially reinforced a year-to-date rally that has pushed the shares more than 50% and toward record highs. The filing is read as an endorsement of Alphabet's AI-led strategy given the conglomerate's value-oriented approach, although the reported ownership dates mean Berkshire purchased at materially lower prices than today's levels. Alphabet reported strong underlying results in Q3: revenue rose 16% year-on-year to $102.3 billion, Google Services revenue increased 14% to $87.1 billion, Cloud jumped 34% to $15.2 billion, net income grew 33% to about $35 billion, EPS was $2.87 (+35%), and the company generated $24.5 billion of free cash flow in the quarter and $73.6 billion over the prior 12 months while holding $98.5 billion in cash and marketable securities. Management attributes the acceleration to AI investments and operating leverage, and CEO Sundar Pichai noted AI is driving real business results across the company. Management has materially increased 2025 capital-expenditure guidance to $91–93 billion to support AI-focused infrastructure, creating both upside via differentiated AI capabilities and concentrated execution risk: such a near-$90 billion capex cycle leaves limited margin for error if demand softens and will increase depreciation pressure on reported margins for years. At an implied P/E near 28 after the rally, the valuation appears reasonable versus growth, but the investment thesis now rests on execution of a capital-intensive transition and sustained Cloud/advertising momentum.
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