Warren Buffett changed his mind twice on Big Tech: First Apple, now Alphabet

Warren Buffett has spent decades avoiding technology companies he believed were outside his circle of competence. That philosophy kept Berkshire Hathaway away from both Apple and Google for years. But over the past decade, Buffett has twice rewritten his own investing playbook—first by making Apple one of Berkshire’s biggest holdings, and now by building a multibillion-dollar stake in Alphabet.

In an interview with CNBC, Buffett revealed that Berkshire’s massive investment in Alphabet was his own decision, dismissing speculation that it was driven by his designated successor CEO Greg Abel.

“I initiated it,” Buffett said in the first public explanation of how Alphabet became one of Berkshire Hathaway’s largest technology investments.

He also clarified Abel’s role in the investment process. “I am not doing anything that he doesn’t approve of. He’s not doing anything I don’t approve of. We talk all the time, but he is the decider,” Buffett said, referring to the incoming CEO.

The remarks mark a sharp contrast with Buffett’s views more than a decade ago.

At Berkshire Hathaway’s 2012 annual meeting, Buffett and the late Vice Chairman Charlie Munger were asked whether they would invest in companies such as Apple and Google. While acknowledging the strength of both businesses, Buffett said, “I would not be at all surprised to see them be worth a lot more money 10 years from now, but I wouldn’t want to buy either one of them.”

Munger shared the same hesitation, saying, “I think we can fairly say that other people will always understand those two companies better than we do. We have the reverse of an edge.”

Buffett’s thinking changed first with Apple. As its valuation became more attractive, he stopped viewing it purely as a technology company and instead saw it as a powerful consumer brand with exceptional customer loyalty and pricing power. Between 2016 and 2018, Berkshire invested about $36 billion in Apple, turning it into one of the conglomerate’s most successful investments.

Now Buffett has made a similar shift on Alphabet, while admitting he waited too long.

He acknowledged in the CNBC interview that he “made a mistake” by not investing in Alphabet sooner. Buffett had previously said he saw the strength of Google’s advertising business through Geico, one of the company’s early advertising customers, but was unsure whether Google would remain the long-term winner in internet search.

Berkshire has since moved aggressively. The company bought nearly 40 million Alphabet shares in the first quarter, spending an estimated $13 billion. In June, it acquired another 28.6 million shares through a $10 billion private placement negotiated by Abel. Although Berkshire bought the shares at a discount, Alphabet’s stock later traded below that level.

Buffett’s confidence in Alphabet rests largely on two businesses: advertising and cloud computing. Google Search and YouTube continue to dominate digital advertising despite concerns that artificial intelligence could erode Search’s leadership. At the same time, Google Cloud is benefiting from strong enterprise demand, with Alphabet’s contracted cloud backlog doubling from $230 billion to $460 billion by the end of the first quarter.

Even so, Buffett believes the AI race presents a significant challenge.

“The real question with Google and all of its competitors now, because they’re all laying out hundreds of billions, and that’s real money,” Buffett said. “That’s the game they’re playing now. They weren’t playing that game with computer software.”

Buffett’s evolving stance on Apple and Alphabet shows that while his core investing principles remain unchanged, he is willing to rethink long-held assumptions when he sees durable businesses with lasting competitive advantages.