Greg Abel opens up on Berkshire’s $10 billion Alphabet bet after Buffett, calls Google a ‘significant player’ in AI

It is no secret that Berkshire Hathaway, under CEO Greg Abel, has been steadily building its position in Alphabet, signalling growing confidence in the Google parent’s AI opportunity.

Berkshire Hathaway announced last month that it increased its investment in Alphabet by 83% in the second quarter, making Alphabet, the parent of Google and YouTube, its third-largest stock holding. Berkshire said in a regulatory filing that it owned nearly 106 million Alphabet shares, which are worth about $37.8 billion as of June 30, up from 57.8 million shares three months earlier.

The stake included a $10 billion investment announced in June to help Alphabet expand its AI infrastructure.

Now opening up about the investment strategy, Abel told CNBC, “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.”

“They hadn’t set the size, but recommended that we consider $10 billion stake. And Warren and I discussed the size. We discussed the size of the discount, and I’d recommended a six-and-a-half per cent discount, and we were comfortable with that,” Abel said.

“Then, ultimately, consummated the transaction.”

Made a mistake: Buffett on not betting on Alphabet early

A few months back, Warren Buffett said that the decision to build Berkshire Hathaway's massive stake in Alphabet was his own.

Earlier, he had acknowledged in the interview that he “made a mistake” by not investing in Alphabet sooner.

At the 2012 Berkshire Hathaway annual meeting, Warren Buffett and the late Vice Chairman Charlie Munger were asked whether they would consider investing in companies like Apple and Google (now Alphabet). While Buffett spoke highly of both businesses, he said, “I would not be at all surprised to see them be worth a lot more money 10 years from now, but I wouldn't want to buy either one of them.”

In 2018, he said he witnessed the strength of Google's advertising business through Geico, one of its early customers, but was unsure whether Google would remain the long-term winner

The AI boom is turning the world’s biggest tech companies into massive infrastructure spenders, with Google among five hyperscalers pouring billions into expanding computing capacity. Alongside Microsoft, Meta, Amazon and Oracle, the company is part of a spending spree that Goldman Sachs estimates could push global hyperscaler capital expenditure to around $1 trillion in 2026.

“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,” Goldman Sachs researchers wrote in an August research analysis.