TLDR
- Berkshire Hathaway purchased 17.8 million Class A shares of Alphabet for $4.3 billion at an average price of $209 per share in Q3 2025
- Pivotal Research analyst raised price target to $400, the highest on Wall Street, citing dominance in search, YouTube, and Gemini AI
- Google Cloud revenue grew 34% year-over-year in Q3 2025, accelerating from previous quarters
- Wall Street Buy ratings for Alphabet increased to 84% from 80% last year as the stock trades at 30 times 2026 earnings
- Alphabet’s custom Tensor Processing Units could reduce AI costs and boost cloud computing profitability
Warren Buffett’s Berkshire Hathaway made waves in the third quarter by purchasing nearly 18 million shares of Alphabet. The investment marks a surprising move for a company that had been trimming positions and hoarding cash.
Berkshire bought the shares at $209 each. The position is now worth $5.6 billion, representing a 50% gain. It accounts for 1.8% of Berkshire’s entire portfolio.
The timing caught many off guard. Berkshire had been selling major holdings and building cash reserves to record levels. The S&P 500 trades at historically high valuations of 31 times earnings.
Regulatory Clouds Clear for Google
Alphabet faced serious headwinds earlier this year. The Department of Justice pushed for the sale of Chrome browser and demanded Google share search data with competitors. These threats weighed on the stock.
A September ruling changed everything. The U.S. district court rejected the forced Chrome sale. Instead, Google must stop exclusive search deals with device makers. The lighter penalty brought investors rushing back.
Google Cloud delivered strong results in Q3 2025. Revenue jumped 34% year over year, accelerating from 32% growth in Q2 and 28% in Q1. The AI boom is driving companies to upgrade their cloud infrastructure.
Analyst Sets Street-High Target
Pivotal Research analyst Jeff Wlodarczak raised his price target to $400 on Friday. The new target is up from $350 and suggests 25% upside. He maintained his Buy rating.
Just one year ago, the highest Wall Street target was $240. Now the second-highest sits at $380. Wlodarczak says Alphabet is “winning everywhere.”
Google search continues generating massive cash flow. Gemini AI keeps improving. YouTube dominates as the world’s top video streaming platform.
Alphabet’s proprietary Tensor Processing Units work alongside Nvidia GPUs. These chips focus on cutting costs for AI tasks. Lower costs could boost cloud computing market share and profitability.
Fellow analyst Michael Levine calls Gemini one of the strongest AI systems available. He credits years of development and data accumulation. Competitors can’t easily replicate this advantage.
Gemini reaches over five billion users across Alphabet’s products. Levine sees this distribution as unmatched. Most users stick with default apps on their devices.
Apple now pays for Gemini access. This boosts margins and frees capital for reinvestment. Routing more searches through Gemini keeps more profit within Alphabet.
Wall Street sentiment has shifted dramatically. Currently, 84% of analysts rate the stock a Buy, up from 80% last year. The average S&P 500 stock gets Buy ratings from only 55% of analysts.
The average price target now stands at $332, jumping from $211 twelve months ago. Targets value the stock at roughly 30 times projected 2026 earnings. Last year, that multiple was just 20 times.
Analysts expect Alphabet’s revenue and earnings to grow at compound annual rates of 13% and 17% through 2027. The stock trades at 28 times next year’s earnings.
Berkshire’s portfolio managers Todd Combs and Ted Weschler likely initiated the Alphabet purchase. They made similar calls on previous tech investments like Amazon. Buffett probably approved the final decision.
The consensus on Wall Street stands at Strong Buy based on 29 Buy recommendations and seven Hold ratings. The stock traded at $318.88 in premarket action following the analyst upgrade.
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