Berkshire Hathaway added 24.5 million Alphabet shares in the second quarter, lifting its stake 45% to about 79 million shares worth $28.2 billion — 9.41% of its equity portfolio and its fourth-largest holding. The Google parent displaced Chevron in Berkshire's top five after only four quarters of ownership, even as Alphabet's AI capital spending pushed free cash flow negative.
Berkshire Hathaway now holds about 79 million Alphabet shares worth roughly $28.2 billion, or 9.41% of its equity portfolio, after adding 24.5 million shares in the second quarter — a 45% increase that pushed the Google parent into the conglomerate's top five holdings for the first time and displaced Chevron.
The position was built in four quarters. Berkshire owned no Alphabet stock until the third quarter of 2025, when then-CEO Warren Buffett bought almost 18 million shares for a $4.4 billion stake. It added 36 million shares in the first quarter of 2026 and another 24.5 million in the second, according to the 13F filing. Only Apple at 22%, American Express at 17% and Coca-Cola at 11% now rank larger.
"Alphabet is the dominant market leader in internet search and one of the top cloud computing stocks," Dave Kovaleski wrote in a Motley Fool analysis published Sept. 11, describing the recent selloff as having "put Alphabet stock at an extremely low valuation, trading at just 16 times earnings."
The concentration cuts both ways for Berkshire holders. Alphabet stock has returned about 37% over the past year but has fallen about 7% over the past month, and the drawdown tracks the same spending concern that now defines the company's cash flow profile. Alphabet raised full-year capital expenditure guidance to $195 billion to $205 billion from a prior range of $180 billion to $190 billion, and reported a $5.8 billion cash outflow in the second quarter — its first negative free cash flow quarter since going public.
CFO Anat Ashkenazi addressed the pressure directly on the earnings call. "We expect the free cash flow will remain under pressure driven by our investments in technical infrastructure, which enables us to capitalize on the AI opportunity and continue to drive attractive returns," she said.
The operating results underneath that spending were strong. Second-quarter revenue rose 24% year over year to $120 billion, and operating income climbed 30% to about $41 billion. The gap between those figures and the cash flow line is the entire debate: Alphabet is converting earnings into data center capacity faster than it is converting them into free cash.
Amazon ran the same play at the start of the year and drew the same market reaction, then saw its shares jump after its most recent earnings report showed cloud revenue improving. That precedent is the bull case for treating Alphabet's capex cycle as a timing issue rather than a margin problem.
Berkshire's own capital allocation has shifted alongside the Alphabet build. CEO Greg Abel authorized $4.53 billion of Berkshire buybacks in the June-ended quarter after $234 million in March, ending a 21-month pause, and the company bought $25 billion of stock overall while selling $3.7 billion. More than $82 billion has been spent retiring nearly 13% of shares outstanding since mid-July 2018.
For Alphabet holders, the signal is that a value-oriented buyer with a multi-decade horizon kept adding through a 7% drawdown rather than trimming into strength. The next test is the third-quarter 13F, due in mid-November, which will show whether Abel added to the position a third consecutive quarter or let the 9.41% weight stand. Alphabet's third-quarter earnings, expected in late October, will show whether free cash flow has turned positive again.
This article is for informational purposes only and does not constitute investment advice.
