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Key Points
Greg Abel took over as Berkshire Hathaway's CEO this year.
It was Warren Buffett, however, who initiated the company's recent move to buy Alphabet.
Berkshire has invested in tech giants in the past, and still owns a big stake in Apple.
When Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) disclosed a position in tech giant Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) last year, many people assumed it was a big sign of a changing of the guard at Berkshire, with Greg Abel about to take over as CEO from Warren Buffett (Abel formally took over at the start of 2026).
Ironically, however, it turns out that Buffett was the one who initiated the move to invest in Alphabet, admitting to it in a recent interview. For investors, it may come as a startling revelation, given that Buffett typically avoids tech and instead invests in businesses that he knows and understands very well.
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While the move may be a surprising one, it underscores a larger theme, which is that many top tech stocks have become so large and their businesses are so broad that investors don't need to have a strong tech background to understand them and be able to confidently invest in them.
Buffett has invested in tech stocks before
Tech stocks aren't exactly foreign to Buffett. For years, Apple has been Berkshire's largest holding and a business that Buffett has been fond of. To a lesser and smaller extent, Amazon has also found its way into Berkshire's portfolio.
While these are considered tech stocks, they operate businesses, such as Alphabet, that Buffett and average consumers are highly familiar with. They aren't incredibly complex businesses, such as those involved in quantum computing, where it may be difficult to understand how they work, why they work, or why they're likely to succeed. Businesses like these are more relatable and easier to understand, making them more accessible to average investors.
It's critical for investors to know what they're investing in
Buffett says, "Risk comes from not knowing what you're doing." It's important, whether someone's considering investing in one of the "Magnificent Seven" stocks or a highly specialized tech company, to understand the core business and its strengths and weaknesses before buying it. Failing to understand it can expose an investor to risks they weren't aware of.
Alphabet, a leading tech company, isn't so specialized that people aren't familiar with how it works. Google Search and YouTube generate the bulk of the company's ad revenue. While there are other areas of its business, including cloud computing and robotaxis, its bread and butter centers around those two highly valuable assets. Buffett, recognizing the dominance that Alphabet has in its industry and the strong moat the company possesses, clearly recognized what many tech investors have known for a long time: it's a great growth stock to own.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
