Key Takeaways
- Berkshire Hathaway (BRK.B) grew its Alphabet (GOOGL) stake 45% in the Q2, and at least 16 other big funds bought or added shares, according to their 13Fs for the quarter ended June 30.
- Alphabet has fallen 20% since June 30, and in the Q3 it reported slower Search growth and $9.1 billion of negative free cash flow.
- Alphabet trades at 20x forward earnings, below its five-year average of 22x, and analysts’ average target sits 40% above the last close.
- The funds’ bet looks better at today’s price than it did in June, for investors who can live with a bigger spending bill in 2027.
Some of the market’s best-known investors loaded up on Alphabet in the Q2. Since June 30, the stock has fallen 20%, and it’s now 40% below its 52-week high.
Berkshire Hathaway led the way. Its latest 13F, for the quarter ended June 30 and filed Aug. 14, shows it grew its Alphabet stake 45% to 78.79 million shares, worth $28.16 billion at quarter-end.
Berkshire had plenty of company
That made Alphabet Berkshire’s fourth-largest holding, at 9.4% of the stocks in its 13F. Berkshire also agreed to invest $10 billion in Alphabet in a private placement.
The placement was part of an $80 billion stock sale Alphabet announced on June 1 to pay for more AI computing capacity.
At least 16 other big funds bought Alphabet or added to it in the quarter, and a few made it one of their biggest bets:
- Dan Loeb’s Third Point grew its stake almost sixfold, to 1.02 million shares, its third-largest holding at 7.9% of the fund.
- Stanley Druckenmiller’s Duquesne Family Office opened a new position of 336,300 shares, worth $120 million.
- Anomaly Capital, a $5.9 billion fund, more than tripled its stake, making Alphabet its second-largest holding at 12.3%.
Not everyone was buying. Torno Capital, a fund with $1.5 billion in US stocks that had about half its portfolio in Alphabet at March 31, had sold 20% of it by June 30, and ICONIQ Capital cut its stake 45%.
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Search slowed, and the spending kept climbing
Alphabet missed on Search and burned $9 billion of cash in Q3, and the stock sank the day after its Oct. 28 report.
Revenue grew 25% to $127.6 billion, and Google Cloud’s revenue more than doubled, up 103% to $30.7 billion. But Search, still the heart of the business, grew 12% to $63.3 billion. That was short of what analysts expected and down from 19% growth in Q1.
Then there’s the cash. Free cash flow was negative $9.07 billion for the quarter. CFO Anat Ashkenazi said on the Q3 call that it was “driven by our investments in CapEx,” along with an inventory build for its TPU system sales and a European Commission fine.
Alphabet held its 2026 capex forecast at $195 billion to $205 billion, and expects to spend significantly more in 2027.
Earnings of $2.12 a share also fell short, after an $8.66 billion loss on its stakes in other companies, including SpaceX and Anthropic.
It had booked a $99.03 billion gain on the same stakes in Q2.
At 20x, the numbers still back the funds
Analysts expect Alphabet’s normalized earnings per share to climb from $10.81 in 2025 to $18.13 in 2028:
And investors are paying a lot less for those earnings than they were this spring. Alphabet trades at 20x forward earnings, below its five-year average of 22x and well down from 33x at the end of April:
It got as cheap as 16x in April 2025, so there’s room to fall further if the cash burn drags on.
Analysts have trimmed their targets since July, but not by much. The average target is $400, down from a July peak of $433 and up from $315 a year ago:
That average, from 60 analysts, sits 40% above the last close, and even the lowest target, $300, is above today’s price.
I’d follow the funds at this price
The risk is the spending. Free cash flow is negative, and Alphabet announced an $80 billion stock sale in June, so investors are counting on a bigger capex bill in 2027 to pay it off.
Still, I think the funds’ bet looks better now than it did in June. The price has come down far more than the business has slowed, and earnings are still expected to climb. If Berkshire was willing to commit $10 billion back in June, I’m happy to follow at 20x.
The funds’ 13Fs for the quarter ended Sept. 30, due by Nov. 16, will show who still held Alphabet by then.
The bigger question is how much higher 2027’s capex goes, and whether Search growth picks back up.
So what is Alphabet stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
