Warren Buffett's last major equity investment as Berkshire Hathaway's chairman isn't working out well so far given the sharp drop in Alphabet shares following the search giant's disappointing third-quarter earnings.
Berkshire loaded up on Alphabet stock in the first half of 2026 including the purchase of $10 billion at about $350 a share as part of the company's $85 billion equity raise in early June.
Alphabet's voting shares are down 11% in after-hours trading at $288 after the company reported third-quarter earnings of $2.12 a share, down from $2.87 in the year-earlier period and below the consensus estimate of about $3.
The company had negative free-cash flow of $9 billion due to its heavy artificial-intelligence-related capital spending.
In a CNBC interview in July, Buffett said it was his decision to buy the Alphabet shares. Buffett stepped down as Berkshire CEO at year-end 2025 while remaining chairman. He relinquished the chairman role recently in favor of his son, Howard Buffett.
It isn't possible to determine Berkshire's average cost on its Alphabet stock, but it's likely above $300 a share -- and perhaps close to $320 a share.
Berkshire bought 18 million Alphabet shares in the third quarter of 2025 when Alphabet averaged about $225 a share, about 40 million shares in the first quarter when the stock averaged about $315 and then nearly 50 million in the second quarter, including almost 30 million in the underwritten offering at about $350. It held a total of 106 million shares -- including voting and nonvoting stock -- on June 30.
Berkshire's Alphabet stake is now worth about $30 billion based on the after-hours stock price, down from a peak of $37 billion in June. Alphabet is Berkshire's fourth largest equity holding behind Apple, American Express and Coca-Cola.
Barron's wrote in June that Berkshire might have been late to the Alphabet party given the run-up in the stock in the prior year.
Berkshire used to provide the cost basis of its top 15 equity holdings but stopped doing so earlier in the current decade. That has made it harder to calculate its profit or losses on many of its newer investments and to hold management accountable for its equity investments.
That table of the equity holdings and cost basis is something that CEO Greg Abel should consider reinstating in his next annual shareholder letter in 2027.
