Alphabet Jumps as Berkshire Reveals $4.9 Billion Stake

Alphabet (GOOGL, Financials) rose more than 5% after Berkshire Hathaway unveiled an unusual tech-sector commitment to the business, which investors saw as a validation of its artificial intelligence plan. In the September quarter, Berkshire bought 17.85 million shares worth $4.93 billion.

The investment comes as public attitude toward giant internet companies has softened. Business executives and analysts worry that AI-related stock prices have outpaced fundamentals.

Alphabet is the best performer among the Magnificent Seven, up over 14% in the December quarter and 46% for the year.Alphabet trades at 25 times forward forecasts, compared to 29 for Microsoft and 30 for Nvidia. Growing cloud momentum, AI-powered search tool use, and strong ad income can support Alphabet's massive data-center spending, analysts say.

Berkshire may finally acquire Google shares after regretting it. Warren Buffett (Trades, Portfolio), Todd Combs, Ted Weschler, or incoming CEO Greg Abel may have started the purchase. When Berkshire announces fresh positions, shares jump, and Alphabet gained $160 billion in early trading.The disclosure indicated Berkshire cut Apple and Bank of America shares, increasing its cash reserves to a record $381.7 billion. Some investors believe Buffett expects higher market valuations overall.