In the initial public offering (IPO) prospectus of Google 21 years ago, founders Larry Page and Sergey Brin paid tribute to Warren Buffett, indicating that the esteemed investor had significantly influenced them. In their letter to prospective investors, they titled it 'An owner's manual for Google's shareholders,' and pointed out a noteworthy footnote.
The footnote acknowledged, 'Much of this was inspired by Warren Buffett's essays in his annual reports and his An Owner's Manual to Berkshire Hathaway shareholders.'
Over two decades later, Buffett has reciprocated this admiration. Late on Friday, Berkshire Hathaway, Buffett's investment company, disclosed that it had acquired a stake in Google's parent company, Alphabet, valued at approximately $4.3 billion by the end of the third quarter. This investment makes it Berkshire's 10th largest equity holding, representing one of the firm's most substantial ventures into the technology sector in recent times — with Apple being its largest investment. The announcement spurred a 3% rise in Alphabet shares on Monday.
This move is noteworthy as Berkshire Hathaway has traditionally shied away from investing in high-growth technology companies. It also marks the first publicly known instance of Berkshire owning a stake in Google. With Buffett, 95, planning to step down as CEO by the end of this year, Greg Abel, his long-standing associate, is expected to take over leadership.
In 2017, Buffett expressed regret over not investing in Google earlier, particularly when Berkshire's insurance subsidiary Geico was incurring substantial advertising costs on Google's platform. He also mentioned missing the opportunity to invest in Amazon, a resolution partly addressed when Berkshire purchased a stake in the e-commerce giant in 2019, still maintaining $2.2 billion worth of Amazon shares.