Warren Buffett disclosed for the first time Berkshire Hathaway's investment background in Alphabet (Google's parent company) during a CNBC interview on the 18th (local time). Buffett reaffirmed that not investing in Google earlier was a 'mistake' because it was an 'asset-light' business, and revealed that the recent large-scale Alphabet investment was his own decision. He stated that Alphabet is 'a company with a higher probability of success than 90 to 95% of companies trading on Wall Street.' Regarding the AI investment competition, Buffett described it as a 'game with no choice' while forecasting that 'ultimately the winners will be companies that maintain high returns on capital.'
Buffett Admits Past Google Investment Miss Was a Mistake
In the CNBC interview on the 18th (local time), Buffett stated, 'Not investing in Google in the past because it was an asset-light business was a mistake.' He evaluated Alphabet as 'a company with a higher probability of success than 90 to 95% of companies currently trading on Wall Street.'
Berkshire Holds Approximately $31 Billion in Alphabet Shares
Berkshire Hathaway currently holds approximately $31 billion (about 43 trillion won) in Alphabet shares. Of this amount, approximately $21 billion was purchased on exchanges. Last month, Berkshire invested an additional $10 billion through a private placement to support AI investment expansion.
Buffett Confirms He Initiated the Investment Decision
Market interpretations suggested this investment was the first major decision by successor Greg Abel, CEO. However, Buffett clarified, 'This time I'll say it. I initiated it.' He added, 'I don't do anything Greg doesn't agree with,' and 'We discuss every day and Greg makes the final decisions.'
Buffett drew a line at the assessment that Alphabet is Berkshire's largest investment. He stated, 'If you only look at publicly traded stocks, it may seem that way, but I also evaluate 100% owned businesses,' adding, 'The value of BNSF railroad is much larger than the Alphabet stake.'
Buffett explained, 'Whether buying publicly traded stocks or acquiring entire companies, the judgment criteria are the same,' emphasizing, 'It's important to buy good businesses at appropriate prices and meet excellent management.'
Buffett Describes AI Investment Competition as Unavoidable
Regarding AI investment competition, Buffett stated, 'Microsoft, Amazon, and Meta all have no choice. Now is a situation where everyone must play this game,' adding, 'If someone provides better results to customers, customers will eventually move in that direction.'
Buffett also positively evaluated the massive investments by AI companies. He said, 'Think about a railroad company investing $200 billion to $300 billion. Even in railroad history, there has never been such capital expenditure,' noting, 'AI companies are no longer asset-light businesses.'
Buffett Emphasizes Return on Capital as Key Investment Criterion
Buffett emphasized not to judge corporate value solely by investment scale. He stated, 'The reason to invest in companies is because they can generate much higher returns than government bonds over the long term,' adding, 'A good business must be able to maintain high return on capital for a long time. That is my standard for a good company.'
FAQ
What did Warren Buffett say about his past decision not to invest in Google?
In a CNBC interview on the 18th (local time), Buffett stated that not investing in Google in the past because it was an 'asset-light' business was a mistake. He evaluated Alphabet as having a higher probability of success than 90 to 95% of companies currently trading on Wall Street.
How much does Berkshire Hathaway currently hold in Alphabet shares?
Berkshire Hathaway currently holds approximately $31 billion (about 43 trillion won) in Alphabet shares. Of this, approximately $21 billion was purchased on exchanges, and last month an additional $10 billion was invested through private placement to support AI investment expansion.
What is Buffett's view on the AI investment competition?
Buffett described the AI investment competition as a 'game with no choice,' stating that Microsoft, Amazon, and Meta all must participate. He noted that if someone provides better results to customers, customers will eventually move in that direction, and emphasized that ultimately the winners will be companies that maintain high returns on capital.
