Warren Buffett’s Parting Gift to Investors Is Crushing the Market 6 Months Later

Quick Read

• Alphabet (GOOGL) has surged roughly 40% since Berkshire Hathaway revealed a $4.3 billion stake in mid-November, with Google Cloud revenue rising 31% year-over-year while the company maintains 90% of global search market share. Berkshire Hathaway (BRK-B) generated compounded annual gains of 19.8% from 1965 through 2025, outpacing the S&P 500’s 10.4% return.

• Warren Buffett’s embrace of Alphabet represents a rare late-career bet on technology after decades of favoring predictable businesses, signaling that the stock trades at a valuation disconnect relative to its dominant competitive positions across search, cloud, AI, and advertising.

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For nearly 60 years, investors have measured themselves against one benchmark: Warren Buffett. Since taking control of Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) in the mid-1960s, Buffett turned a struggling textile mill into a $1 trillion empire while delivering returns that left the broader market in the dust. According to Berkshire’s annual reports, the company generated compounded annual gains of roughly 19.8% from 1965 through 2025, versus about 10.4% annually for the S&P 500.

That difference sounds small until you run the math. A $10,000 investment in Berkshire in 1965 would be worth about $600 million today. The same investment in the S&P 500 would have delivered about $4.5 million — excellent, just nowhere close to Buffett.

So when Buffett makes a major move, Wall Street pays attention. And one of his last tech bets is already rewarding shareholders in a big way. Alphabet (NASDAQ:GOOGL) is up around 40% since the purchase.

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Buffett’s Long-Awaited Embrace of Big Tech

For decades, Buffett stayed far away from technology stocks. His reasoning was simple: he preferred businesses he could easily understand and predict. Coca-Cola (NYSE:KO), American Express (NYSE:AXP), and See’s Candies fit that mold. Early Silicon Valley did not.

That changed in 2016 when Berkshire began building its now-famous stake in Apple (NASDAQ:AAPL). Buffett later called Apple “probably the best business I know in the world.” At one point, Apple represented roughly half of Berkshire Hathaway’s entire equity portfolio.

Yet even after Buffett spent the last two years trimming the position, Apple still accounts for about 19.5% of the portfolio’s total. In mid-November, Alphabet was revealed, with Berkshire owning roughly 17.8 million shares worth approximately $4.3 billion at the time.

That was not a toe-in-the-water position. It was one of Berkshire’s larger new investments in years.

Buffett’s “Final” Tech Bet Is Already Paying Off

Most Berkshire watchers believe Buffett’s investing lieutenants Todd Combs or Ted Weschler likely initiated the Alphabet purchase. Both men have influenced Berkshire’s more modern tech investments over the last decade. Still, a $4.3 billion investment almost certainly required Buffett’s blessing.

But regardless of who first pitched the idea, the timing was brilliant. With Alphabet now trading near $385, Berkshire’s stake has gained approximately40% since the position was revealed.

Surprisingly, part of that jump came immediately afterward. Alphabet shares climbed more than 15% in the following week as investors and institutional money managers rushed to mirror Berkshire’s move.

That reaction indicates Buffett’s endorsement still carries enormous weight across Wall Street, even at the end.

Alphabet’s Business Keeps Delivering

Granted, Berkshire’s disclosure gave Alphabet shares an early boost. But the company’s underlying business has done much of the heavy lifting since.

Alphabet’s latest earnings report reinforced why Buffett may have viewed the stock as a classic moat-driven business rather than just another AI trade as it paired AI growth with expanding profitability. Google Cloud revenue rose 31% year over year in Q1, while operating margins widened as AI-powered search tools improved monetization.

It shows Alphabet is finding ways to make more money from AI without destroying profitability in the process.

Meanwhile, it still controls roughly 90% of global online search, according to StatCounter data. YouTube remains the dominant streaming video platform. Android powers billions of devices worldwide. And Google Cloud continues taking share in enterprise AI infrastructure.

Buffett was never chasing hype. He doesn’t buy companies simply because they are attached to the next big trend. Instead, he looks for durable competitive advantages, massive cash generation, and businesses competitors struggle to displace.

Alphabet checks every one of those boxes.

Key Takeaway

In short, one of Warren Buffett’s parting gifts to Berkshire Hathaway shareholders may prove to be Alphabet.

Regardless of whether Todd Combs or Ted Weschler first brought the idea forward, Buffett likely recognized what many investors were missing last year: Alphabet was trading more like a mature utility than a dominant technology platform with multiple growth engines still accelerating.

That disconnect created opportunity.

Today, Alphabet continues generating hundreds of billions in annual revenue, tens of billions in free cash flow, and leading positions in search, cloud computing, AI, and digital advertising. Yet its valuation still remains below many fast-growing AI peers on a forward earnings basis. So far, Alphabet looks like another example of Buffett spotting value before the crowd fully caught on.

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