According to Business Insider, Warren Buffett’s Berkshire Hathaway purchased 17.8 million shares of Alphabet worth $4.3 billion as of September 30. The company’s stock price surged nearly 40% during the third quarter from under $180 to $244, and has climbed another 17% since then to clear $285. If Berkshire bought early in the quarter, its position could be worth around $5.1 billion now versus a possible $3.1 billion purchase price. Investor Tom Russo, whose firm holds $1.1 billion in Alphabet and $1.8 billion in Berkshire, hailed the tech giant as a “remarkably solid and strong business” trading at below-market P/E ratios. Russo said Alphabet shows a “capacity to suffer” by making long-term investments that constrain short-term profits.
Why Alphabet works for Buffett
Here’s the thing about Alphabet that makes it a classic Buffett-style investment, even though he’s traditionally avoided tech. The company generates mountains of cash from its core search and advertising business, which gives it the freedom to invest heavily in long-term projects without Wall Street panicking. Russo’s team actually “applauds” Alphabet’s commitment to funding speculative “moonshot” projects. They look right through the heavy R&D spending to see the underlying profitability. Basically, Alphabet has what Buffett loves – a durable competitive advantage and predictable cash flows, even while they’re spending billions on future technologies.
The real risks nobody’s talking about
But here’s where it gets interesting. Russo thinks everyone’s focused on the wrong danger. While people worry about AI stocks crashing, he sees something much scarier. America’s national debt has nearly doubled in the past decade, soaring from below $20 trillion in 2016 to over $38 trillion today. The pressure to service that debt, combined with growing threats to the US dollar’s status as the world’s reserve currency, could lead to serious financial disruption. Think about it – what happens if countries start looking elsewhere for satisfaction, as Charlie Munger would say? That’s the kind of systemic risk that could make an AI stock correction look like a minor blip.
Alphabet beyond just tech
Russo makes a compelling point about how we mischaracterize Alphabet. It’s not just another tech company – it’s “deeply embedded in the commerce of the world.” Businesses rely on it to reach customers effectively and efficiently. That embeddedness creates a moat that’s incredibly difficult for competitors to cross, even if they have technological advantages. When you’re that essential to global commerce, you’re not just selling ads – you’re facilitating economic activity itself. And that’s the kind of business that can weather storms, whether they’re technological shifts or broader economic challenges.
Bigger picture worries
So while everyone’s watching AI stocks, Russo’s looking at bond markets, currency fluctuations, and geopolitical shifts. He warns that retreating from the world stage could stymie living standard gains and prove destabilizing. The real financial disruption might not come from overvalued tech stocks but from the “more unexamined” areas of macroeconomics and global politics. It’s a sobering reminder that sometimes the biggest risks aren’t the ones everyone’s talking about – they’re the quiet ones building in the background while we’re all distracted by the latest tech drama.
