Berkshire Bets Big: Alphabet Is Now Its #3 Stock Pick

Warren Buffett once said he didn't understand tech. That era is officially over. Berkshire Hathaway added $1.7 billion worth of $GOOGL stock in Q2, making Alphabet its third-largest equity holding at over $3.6 billion total. About 60% of the 48 million+ shares added came through a private placement announced in early June, with the rest scooped up on the open market. CNBC's stock movers coverage flagged this as one of the more quietly significant 13F filings of the quarter.

For context, Berkshire's top two holdings remain $AAPL and $AXP, so slotting Alphabet at number three is not a casual footnote. It's a statement. And it lands just as OpenAI's Greg Brockman is on every screen telling CNBC that compute is the new oil and 1 billion ChatGPT users prove the AI demand story isn't hype. Berkshire is, apparently, listening.

But the Alphabet move wasn't the only headline from Berkshire's quarter. The firm more than doubled its stake in $M (Macy's) to 7 million shares, marking its first department store investment in roughly 60 years. Macy's has gained over 80% in the trailing 12 months, so either Berkshire sees value the market hasn't fully priced, or someone at Omaha really misses the perfume counter. Berkshire also added to $DAL (Delta Airlines) and homebuilder $LEN (Lennar), while continuing to buy back its own shares.

The bull case on Alphabet here is straightforward: AI infrastructure spend is accelerating, Google's cloud and Search businesses are compounding, and now you have Buffett's team providing a very public stamp of approval via a private placement no less. Hightower's Stephanie Link, speaking on CNBC, called out broad earnings strength across sectors with 10 out of 11 S&P sectors growing last quarter, which is the kind of macro backdrop that rewards quality compounders like Alphabet.

The bear case? Alphabet still faces regulatory overhang, the DOJ antitrust saga isn't resolved, and buying at $3.6 billion committed means Berkshire needs this to work for years, not quarters. Also worth noting: the Macy's bet is a high-conviction contrarian call on physical retail at a time when job market data is wobbling, with the US unexpectedly losing 23,000 jobs in June against expectations of 80,000 to 100,000 added.

When the most famously patient investor in history starts moving this aggressively into AI-adjacent tech and beaten-up retail in the same quarter, you either trust the process or you explain to your grandkids why you argued with Warren Buffett.