Alphabet’s sharp selloff after disappointing earnings may have pushed Berkshire Hathaway’s big Google stake into the red, and that matters because the position is now large enough to move the needle on one of the world’s most closely watched conglomerates.
Alphabet selloff hits Berkshire's Google stake
For long-term investors, the bigger takeaway is not that Berkshire made a bad quarter-to-quarter trade — Buffett has never run the company that way — but that even a fortress balance sheet can feel the impact when a top-five equity holding gets hit at the wrong time. Alphabet is Berkshire’s fourth-largest stock position, behind Apple, American Express and Coca-Cola, and Berkshire owned 106 million shares at the end of June. At the latest quoted price of $288.93, that stake was worth about $30.7 billion, down from more than $37 billion at its June peak.
The market’s reaction to Alphabet’s third-quarter report was severe for a company that still has one of the best businesses in global technology. Earnings per share came in at $2.12, below expectations and down from $2.87 a year earlier, even as operating profit climbed 30% to $40.58 billion. The real tension for investors is that Alphabet’s core ad and cloud franchise remains strong, but the company is spending aggressively on artificial intelligence, which helped drive a negative free cash flow of $9 billion for the period. That’s the sort of trade-off that can spook the market in the near term while still laying the foundation for much stronger earnings power later.
Berkshire’s own economics depend heavily on when it bought. The company does not disclose its average cost basis, but the known purchases suggest a blended entry above $300 a share, with later tranches reportedly around $315 and as high as $350. If that estimate is right, Berkshire may now be sitting on an unrealized loss in Alphabet, at least on some of the more recent purchases. That is painful on paper, but it is also the kind of mark-to-market move Berkshire has long told investors not to obsess over.
What matters more is how the accounting works. Under US GAAP, changes in the value of Berkshire’s equity portfolio flow through quarterly earnings, which means Alphabet’s drop could show up in Berkshire’s fourth-quarter results. Berkshire has already warned investors not to read too much into those swings, because they can distort reported earnings without changing the underlying economics of the portfolio. In other words, the headline loss may matter more for sentiment than for cash generation.
Still, there is a governance angle here that investors should not ignore. Berkshire’s position has become so large, and Buffett has already stepped back from the chief executive role, that Greg Abel’s era may bring more pressure for transparency around cost basis and portfolio disclosures. Barron’s has argued Berkshire should revive a table showing purchase prices for its biggest holdings, and that would help shareholders better judge the economics of bets like Alphabet.
For Berkshire investors, the stock’s long-term case is unchanged: durable businesses, enormous liquidity and a portfolio built to compound over years, not quarters. For Alphabet investors, the message is equally clear — the business is still fundamentally strong, but the market is no longer paying any premium for execution missteps or heavy AI spending. If you own either stock for the long haul, this is a reminder to focus on earnings power, not one quarter’s mark-to-market. The volatility is worth watching, but neither company looks broken.
| Entity | Gains | Losses |
|---|---|---|
| Alphabet | ▲Long-term AI investment runway | ▼Near-term market confidence |
| Berkshire Hathaway | ▲Potential buying opportunity over time | ▼Mark-to-market portfolio value |
| Existing Berkshire shareholders | ▲Durable compounding engine | ▼Short-term earnings noise |
| Opportunistic long-term investors | ▲Better entry points | ▼Near-term volatility |
