Berkshire Hathaway's New Leader Has Loaded Up on Alphabet With $10 Billion in Cash. Here's the Likely Reason.

At the end of last year, Warren Buffett retired as chairman and CEO of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) and passed the reins to Greg Abel. Although Buffett still has some influence on the company, it's clear that Abel and Berkshire Hathaway are embracing new strategies.

Since Abel took over, Berkshire Hathaway's stock portfolio has changed a bit, and one of the biggest shifts is that it has loaded up on Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL). Berkshire Hathaway purchased its first Alphabet shares in late 2025, but Abel has taken it up a notch. It's now Berkshire Hathaway's fifth-largest holding, accounting for 8.7% of its stock portfolio (across both share classes).

Alphabet isn't the typical Berkshire Hathaway investment, but amid the evolving artificial intelligence (AI) landscape, it makes sense for the conglomerate to embrace an AI company that has its hands in many pots. Between its prior public stake and the company's announcement of a new $10 billion private placement purchase in June, Berkshire Hathaway now holds a nearly $31 billion stake.

Alphabet is becoming a one-stop AI shop

It's clear that AI is here to stay. The way people and businesses interact with it will inevitably evolve, but the technology itself isn't going anywhere. Alphabet is a smart investment for Berkshire Hathaway because it's a full-stack AI company that handles most of the pipeline in-house. It has operations in key parts of the AI ecosystem, including:

• Research: Google DeepMind.
• Hardware: Custom AI chips.
• Infrastructure: Google Cloud and data centers.
• Applications: Gemini, productivity apps, and AI Overviews.

Alphabet still relies on other companies for certain hardware -- such as Nvidia for chips or Taiwan Semiconductor Manufacturing Company for manufacturing -- but it's slowly but surely reducing its reliance on third parties and heading toward vertical integration.

When you're too reliant on other companies, you're at the mercy of their pricing and supply, so Alphabet is putting itself in a position to control more of its own destiny.

Google Cloud is becoming one of Alphabet's most impressive businesses

If you're considering adding AI companies to your portfolio, it makes sense to include one of the leading builders of cloud computing infrastructure. Google Cloud lags behind Amazon Web Services (AWS) and Microsoft's Azure in market share, but it's by far the fastest-growing major cloud provider.

In the first quarter, Google Cloud revenue jumped 63% year over year to $20 billion. AWS and Azure grew their revenues by 28% and 40%, respectively, in their most recently reported quarters.

Don't expect Google Cloud to catch up to AWS or Azure in terms of size anytime soon, but its relatively small size leaves it plenty of room for growth as the cloud computing market as a whole grows. Alphabet stock is a perfect way to invest in AI without throwing money into more volatile and speculative businesses.

It has cash flow that only a handful of companies can match, a virtual monopoly in online search, and not much of the risk that comes with cyclical tech businesses or newer companies.

Stefon Walters has positions in Microsoft and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Amazon, Berkshire Hathaway, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.