Warren Buffett's company just unveiled a rare bet on a big tech company, and it showed right away

Alphabet's share price surged 5.2 percent on Monday after Berkshire Hathaway, Warren Buffett's investment company, disclosed a stake in the tech giant that owns Google, Reuters reported.

The stock purchase, a rare bet on technology by Buffett and Berkshire, comes amid growing concerns about massive AI spending and stock prices, as tech giants spend hundreds of billions of dollars to build data centers and buy the chips that power them.

A filing with US regulators on Friday showed that Berkshire owned 17.85 million shares of Google parent company as of September 30, the last reporting period. The stake would be worth $4.93 billion at the stock market's previous close, according to Reuters calculations.

While Berkshire's investment could be seen as a validation of the tech sector, questions about the sustainability of this spending spree have sent markets reeling in recent weeks.

Buffett said he regrets not investing in Google

Buffett, also known as the “Oracle of Omaha” for his long-term investment strategy and ability to find value in companies others ignore, will end his more than 60-year tenure as chief executive of Berkshire Hathaway at the end of 2025.

It was unclear whether Buffett, his portfolio managers Todd Combs and Ted Weschler or Abel made the purchase of Alphabet shares, although Buffett typically manages the larger investments.

At Berkshire's 2019 annual meeting of shareholders, Buffett and late vice chairman Charlie Munger said they regretted not investing in Google sooner.

“I screwed up,” said Munger, who died in 2023 after being considered Buffett's “right-hand man” for years.

The selective bets of Warren Buffett's company

The move will also give Berkshire a position in a slightly more moderately valued tech giant compared to its AI-focused rivals.

In return, Berkshire reduced its stake in Apple, but the iPhone maker remains the company in which Buffett's company has the largest investment, worth $64.9 billion. Buffett has long argued that Apple is a consumer products company, not a technology bet.

Berkshire also pared its stake in Bank of America ( BAC.N ), the latest stage of a pullback that began last year.

Buffett's company has let its cash hoard climb to a record high, unnerving some investors who see the company as an indicator for the New York Stock Exchange and the broader U.S. economy. They fear that the cash build-up signals that Buffett views the prices at which stocks are trading on the stock market as too high, a sign of a possible “bubble” about to burst.

But the investment in Alphabet suggests that Berkshire may be balancing caution with opportunism, selectively placing capital in companies it deems resilient.

Alphabet's share price is up 46% this year, a significantly higher return than the S&P 500, the US stock market benchmark.

Even so, Berkshire's stock portfolio remains heavily skewed toward financial services, which made up 36.6% of investments in September.