Key Highlights
- Berkshire Hathaway purchased approximately $17 billion worth of Alphabet shares during Q2, elevating it to Berkshire’s third-biggest position with about 106 million shares
- Berkshire CEO Greg Abel described Google as a “significant player” in artificial intelligence, backed by insights from AI adoption across Berkshire’s diverse business portfolio
- The conglomerate initially established its $10 billion position about 15 months prior at a 6.5% price discount
- A U.S. federal court denied the Department of Justice’s demand for Google to divest its AdX advertising platform
- Wall Street analysts maintain overwhelmingly bullish sentiment with 28 analysts rating GOOGL a consensus Strong Buy and an average target price of $425.88, suggesting 26% potential upside
Shares of Alphabet (GOOGL) are climbing in Thursday’s pre-market session, trading near $337.12, reflecting a 0.63% gain. The upward momentum stems from two distinct positive developments: substantial backing from Berkshire Hathaway and a beneficial legal decision concerning Google’s advertising technology operations.
During a Wednesday interview on CNBC, Berkshire CEO Greg Abel disclosed that the investment firm accumulated approximately $17 billion in Alphabet shares throughout the second quarter. This acquisition represented the most substantial portfolio addition Berkshire made during that three-month period.
The firm’s current holdings total roughly 106 million shares across Alphabet’s Class A and Class C stock, with a present market value near $36.6 billion. This position ranks as Berkshire’s third-largest equity investment.
Abel emphasized that the investment decision was informed by real-world observations. Since Berkshire controls businesses spanning numerous sectors, the company gains firsthand insights into practical AI implementation and its tangible results.
“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,” Abel told CNBC’s Becky Quick.
Berkshire first entered its Alphabet position approximately 15 months ago, deploying $10 billion at a 6.5% price reduction. Abel revealed that he personally advocated for that discount rate, which received Warren Buffett’s approval.
Federal Court Ruling Favors Google’s AdX Business
In addition to the Berkshire announcement, a federal judge ruled Wednesday against the Justice Department’s attempt to compel Google to divest its AdX advertising exchange. This decision eliminates a significant regulatory uncertainty surrounding Alphabet’s operations.
The court’s verdict allows Google to maintain ownership of AdX instead of facing mandatory separation. From an investor perspective, this outcome delivers greater predictability regarding Alphabet’s advertising technology revenue prospects.
The combination of both developments is encouraging investors to increase their positions as Thursday’s trading session approaches.
Abel also highlighted an additional secondary advantage Berkshire stands to gain from artificial intelligence expansion. The surge in data center requirements is pushing electricity demand upward, potentially benefiting Berkshire Hathaway Energy’s operations.
Analyst Community Maintains Strong Optimism
The investment community continues showing robust confidence in GOOGL. Among 28 analysts tracking the stock, 24 assign it a Buy recommendation while four maintain Hold ratings. Currently, zero analysts recommend selling.
The consensus price target stands at $425.88, indicating approximately 26% appreciation potential from present trading levels.
Alphabet ranks among five major hyperscalers, alongside Microsoft, Meta, Amazon and Oracle, that are investing heavily in AI infrastructure. Goldman Sachs projects that combined hyperscaler capital expenditures could reach approximately $1 trillion by 2026.
During the same quarter that saw its substantial Alphabet purchase, Berkshire also expanded its Delta Air Lines stake by 44%, representing roughly $1.6 billion in additional investment.
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