Recently, Berkshire posted its 13F filing with US regulators, giving investors like us a glimpse of its trading activity last quarter. And while there were a few interesting trades in Q1, one stood out above the others.

A massive buy

The trade I’m referring to is buying activity in Google owner Alphabet (NASDAQ: GOOG) (NASDAQ:GOOGL). In Q1, the firm added 36.4m shares of the GOOGL ticker, increasing its position size by over 200%, and 3.6m shares of the GOOG ticker (a new position).

As a result of this buying, the company held 54.2m GOOGL shares and 3.6m GOOG ones at the end of the quarter (making Alphabet a top 10 holding). At today’s share prices, those stakes are worth a total of about $23bn.

I’ll point out that while it’s still early days, this trading activity already looks very profitable for the firm because since the end of Q1, Alphabet has soared to new all-time highs.

We don’t know exactly what prices Berkshire paid for its shares. But given that both tickers were in the high $200s in late March (and are now in the highs $300s), it’s most likely sitting on a huge profit.

A trade worth following?

Should investors consider following Berkshire and buying Alphabet shares today? Personally, I think it could pay to wait.

To my mind, the growth stock is a little expensive today. At present, the forward-looking price-to-earnings (P/E) ratio is about 27.

That’s miles above its 10-year average P/E ratio. And to my mind, it doesn’t leave a lot of room for a setback (like a slowdown in global advertising spend or cloud computing/AI spend).

I’d probably want to see the P/E ratio below 25. I’d consider buying more shares myself if it was in the low 20s.

I’ll point out that I do see a lot of long-term growth potential here. Looking ahead, this company is well placed to generate growth from cloud computing, chips, generative AI, digital advertising, self-driving cars, and more.

I’m particularly excited about the potential in the chip space. Recently, the company has done deals with the likes of Meta Platforms, Apple, and Anthropic.

I’m also excited about the potential of its generative AI app Gemini, now that it’s being integrated across the Google platform. It’s worth noting that in Q1, Gemini Enterprise saw 40% quarter-on-quarter growth in paid monthly active users, which shows that businesses are using this (and not just Anthropic’s Claude and OpenAI’s ChatGPT).

But valuation is important. And right now, I think there are better stocks to consider buying given the lofty earnings multiple here.

Edward Sheldon has positions in Alphabet and Apple.

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Before I buy a share, there are three questions inspired by Warren Buffett I tend to ask myself. If I answer even one of them negatively, that will typically be the end of my thought of buying that share at that moment.

Do I understand the business?

Warren Buffett talks about aiming to stay inside his circle of competence when investing.

In other words, he aims to avoid things he does not understand.

That seems simple enough. When a hot new stock is soaring, though, it can be easy to get carried away with its momentum and not pay enough attention to the underlying business.

But if I do not really know what a company does and what its sector looks like, I cannot assess its competitive advantages and how its prospects look.

Does the balance sheet put me off?

Most people’s idea of a good way to spend a few hours is not poring through hundreds of pages of a company’s accounts.

Then again, most people do not have anything like the stock market success of Warren Buffett.

Buffett pays close attention to a company’s published accounts before investing – and for good reason.

A listed company is obliged to include certain information in its accounts, such as its borrowings and cash flows.

Understanding such figures can help someone get a detailed picture of a business.

During the 2008 financial crisis, when Lehman Brothers hoped Warren Buffett might step in to help save it, the Sage of Omaha did not rely on endless meetings with Lehman’s management to make the call.

He sat down and read the company’s most recent publicly available accounts for a few hours. He saw red flags that made him decide then and there he would not be investing.

Is the price attractive?

Early in his career, Warren Buffett was what is known as a value investor.

As the name implies, he was focused on buying things cheaply.

Later, in a shift he credited to his partner Charlie Munger when they were negotiating to buy See’s Candies, Buffett changed approach. Rather than focusing exclusively on cheapness, he now sought to buy into attractive companies at what he called fair prices.

I think this makes sense. Take Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) as an example.

The share price is up 134% over just one year and 235% over five. I think the company continues to have great prospects. But at its current price, I am not ready to buy. Why?

Alphabet currently sells for 30 times earnings. That may not seem outrageously high, especially in the context of tech shares today.

But I see it as being on the expensive side.

Yes, Google is a strong brand with a huge user base. YouTube has ongoing growth potential and AI could help propel Alphabet’s earnings higher by reducing staff costs.

But it could do the opposite. Like peers, Alphabet is spending heavily on infrastructure for AI. Its AI rivals also pose a threat to its search business.

So although I see it as a great business, the current Alphabet stock price strikes me as high. For now, I will not be investing.

Christopher Ruane has no positions in Alphabet. The Twelfth Magpie has recommended Alphabet. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor and Hidden Winners. Here at The Twelfth Magpie we believe that considering a diverse range of insights makes us better investors.

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Indeed, just yesterday (8 April) we saw some shares surge on the back of the latest developments in the Middle Eastern war.

But while that may offer some short-term relief to investors, I think it is also a stark reminder of how fragile investor sentiment currently is. Yesterday was a good day in the stock market – but there could be more painful days ahead.

I think now is the perfect time to get ready for a dramatic stock market crash, in fact.

The value of preparation over market timing

That does not mean I necessarily expect a crash soon.

Sure, I see lots of reasons why a dramatic crash could make sense. Oil prices have lately surged. That will probably push up inflation substantially.

Geopolitical tensions are high, shipping rates are all over the place and investors are nervous. None of those factors tend to be positive for the stock market overall.

But markets can and do defy negative circumstances. Conversely, sometimes they struggle even when the economy is strong and businesses are doing well.

That is why it can be a costly mistake to try and time the market.

We know it will crash sooner or later. I also reckon there are good reasons why that could happen soon – but there is no certainty it will. As John Maynard Keynes said, markets can remain irrational longer than you can stay solvent.

My solution?

Instead of trying to time the market, I am getting ready scoop up some potential bargains in the next crash – whenever that turns out to be.

Separating business quality from current share price

In practice, that means I am updating a watch list of companies that I would like to invest in if I could do so at an attractive price.

These are firms I think have great businesses. So, you may wonder, as a long-term investor, why do I not simply buy them now?

The answer is valuation.

Even a great company can make a poor investment if someone pays too much for it.

As stock market crashes can be short-lived, I want to be ready to act when the next one happens. That could happen at any moment, so I see now as the time to keep my list updated.

Here’s a share I have my eye on

One name on my list is Google owner Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

Its share price has surged 180% over the past five years. At 29 times earnings, it may not look as obviously overpriced as some tech firms.

Still, that price is too high for my tastes. Alphabet faces risks ranging from its massive investment in AI infrastructure not paying back to a weak economy eating into advertisers’ willingness to spend on YouTube ad slots.

Still, the underlying business remains strong.

Google, YouTube and other Alphabet businesses benefit from the company’s tech strength, massive user data and strong brand awareness.

The motive to switch to a different provider is often low. Barriers to switching can be high for Alphabet’s enormous installed base of regular users. That ought to help long-term profitability.

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In reality, though, a crash can be terrifying for some share owners, but a terrific opportunity for other investors.

Let me explain why.

When, not if

Just as British people famously love to talk about the weather even with no control over it, some investors love to pontificate on what might happen next in the market despite having no influence over that.

The reality is that nobody knows with certainty when the next stock market crash will be. A lot of time and effort is spent trying to time the market. To my mind it is poorly spent.

While we do not know when the next crash will be, history teaches us that there will be one sooner or later.

That could be tomorrow – or it could be years from now. Either way, I think it pays to be prepared and try to turn a stock market crisis into an investing opportunity.

What a crash really means

One reason people fear a stock market crash is because they are worried it could send the value of their share portfolio plummeting.

That is true – and it can be an alarming thing to experience.

But – and this is a crucial point – that is only the paper value. In other words, the market is providing a constant valuation of their shares but they can ignore it if they choose.

It is like owning a home, boat, coin collection, or anything that has some market value. That value may go up and down while you own it. But until you sell, any loss or gain is just on paper.

Mixing the wheat and the chaff

Some shares go down in a stock market crash and recover only slowly, if at all.

Maybe they were overvalued in a pre-crash bubble. Or perhaps the crash and wider financial shifts have changed their underlying business value.

But as panic grips the market and people start dumping their holdings, sometimes indiscriminately, perfectly good shares can be dramatically marked down in price even though their underlying investment case may not have changed.

That can be an opportunity to scoop up some blue-chip bargains.

Getting ready now

Such opportunities, though, can be short-lived. So it makes sense to be ready.

To that end, I make and update a shopping list of shares I would like to own, if only I could buy them at an attractive enough price.

One name on my list is Google and YouTube owner Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

The share has been buffeted at points over the past couple of years by concerns about whether AI will hurt its search business. But that seems like ancient history now, given how the Alphabet stock price has been doing. For now, it remains too high for me to buy.

I do think AI could be a risk to search. But it could be an opportunity too. It may help Alphabet customize its content even more and deepen its already strong customer loyalty.

Alphabet has a proven business model that generates large amounts of cash (though AI expenditure could eat into that).

It owns strong brands, has a massive customer base, and has the technical expertise to try and turn AI to its advantage, in my view.

The post If the stock market crashed tomorrow, what would that mean for investors? appeared first on The Twelfth Magpie.

Don’t try to time the market

Buffett has sat on large piles of cash at points, leading some to think he was trying to wait for a big enough market downturn to spend. But he is smart enough to know that nobody can time the market with total confidence – and he does not try to do so.

Instead, his approach has been to buy individual shares when he thinks they are attractively valued, hold them for the long term, and then sometimes sell them.  

That can look like timing the market because it involves buying shares at what look like cheap prices. Often, a good moment to do so is following a stock market crash.

But buying bargains when they appear is not the same as trying to time the market. Buffett did not pile into dotcom stocks then hope to bail out on a big profit before the market peaked, for example.

Sticking to what you know and understand

In fact, Buffett did not bother buying any dotcom stocks at all back in the heady days of the turn of that era. Nor did he buy leading AI shares before stepping down as chief executive of Berkshire Hathaway at the turn of this year.

There is a simple reason, even before getting onto valuation. Buffett likes to stick to what he understands. He long expressed a belief that he did not have the necessary knowledge to judge whether tech companies had the sort of business characteristics he looked for.

Only years later did he invest in IBM and Apple.

A Buffett-like moat

One tech share he and partner Charlie Munger mused about missing out on was Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

The reason was that, in this case, they felt they did have insights into Google and failed to act on them. Berkshire owned a business that was already splashing a lot of cash buying ads on Google, so Buffett and Munger could have put two and two together to see the wider potential of the Google business.

Alphabet has several characteristics Buffett likes in a stock and one is its ‘moat’. This is how Bhe describes a competitive advantage that keeps rivals at bay.

Google’s moat comprises its huge volume of user data, proprietary technology and a proven money-making model not only through search but other properties like YouTube too.

AI is a risk to Google’s search dominance. It could lead to less searches and therefore less advertising revenue. But it could also present an opportunity for Alphabet, given the company’s huge amounts of organised information that could help it make use of AI itself.

Alphabet has a massive customer base and has proven highly cash generative over time (though AI costs could reduce that).

But, like Buffett, I like to buy into great businesses at attractive prices. The current Alphabet stock price is too high for my tastes, so I will not be investing. 

The post Could we be in a bubble? I’m taking the Warren Buffett approach! appeared first on The Twelfth Magpie.

The big question is how much further can this bull run go?

Let’s have a look.

Wall Street gets more bullish

If you follow my writing, you’ll know I don’t always trust institutional analysts. There are some really great ones, and some guys who are really stealing a living.

I say that because I find the consensus opinion on Alphabet really interesting. The consensus was Buy until November 2025 at which point it became a Strong Buy.

To me, however, it was clear that the stock was vastly undervalued relative to its growth potential earlier in the year. Now, in my opinion, there’s much less margin of safety.

Margin of safety diminishes

The margin of safety is the principle of investing with a significant discount between a company’s market price and its intrinsic value.

This gap provides protection against errors in analysis, adverse developments, and market volatility, helping investors minimise the risk of permanent capital loss while preserving long-term returns.

It’s something very successful investors like Warren Buffett have talked about extensively. How the investor defines fair value is up to them, of course.

For me, it’s all about relative valuation, growth, profitability, and the balance sheet.

Today, Alphabet trades around 30.6 times forward earnings — that’s about 30% above the IT sector average and 88% above the communications sector average. The price-to-earnings-to-growth (PEG) ratio is two — 20% above the IT sector average and 57% above the communications sector average.

These metrics suggest an overvaluation. So, why are analysts so bullish?

Well, it’s a quality company with great long-term drivers, including in emerging sectors like self-driving cars and quantum computing.

The market also got quite excited about the idea that Alphabet could sell its ASICs (TPUs) — an application-specific chip — becoming an Nvidia competitor in hardware.

The bottom line

For me, there is limited near-term growth potential. Search — and other Google Services — and Cloud are strong businesses but the stock is priced for these segments to do well.

So, what could that mean for a £20,000 investment in Alphabet this year?

Well, momentum is really hard to forecast and earnings beats could certainly send the stock higher. What’s more, we could have some more great news about the Willow quantum chip or the self-driving cars.

However, the key word here is ‘could’. Unless you’re working at Alphabet, you’re very unlikely to know whether these things could happen before the rest of the market.

Stripping it down to the valuation, I’m suggest Alphabet would do well to maintain its current price. But I do expect more strong operational performance. Putting them together, I’d only expect a modest return on £20,000 over the next year. Maybe £21-22k.

However, I still think the stock is worth considering for the long run. It’s a tech giant with lots of strings to its bow.

The post Prediction: in 2026 the red-hot Alphabet share price could turn £20,000 into… appeared first on The Twelfth Magpie.

Our monthly Fire Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of growth-focused Fire recommendations, to help Fools build out their portfolios.

Here are the latest three picks from our team of experts.

• Alphabet posted its first $100 billion quarter in revenue in the third quarter, with Google Cloud accelerating to 34% growth and AI features reinvigorating Search.
• Alphabet is aiming to convert its $155 billion cloud backlog into revenue while scaling its Gemini AI models across Search, Cloud, and enterprise products.
• Investors should pay attention to AI Mode monetization rates, Waymo’s expansion to 20+ cities, including London and Tokyo, and whether the company’s heavy infrastructure spending weighs on profitability.
• Berkshire Hathaway disclosed a multibillion-dollar stake during this period, a vote of confidence that proved well timed given the stock’s 64% gain for the year as of this writing.
• A U.S. federal judge declined to force a divestiture of Chrome in September, instead ordering Google to end exclusive search distribution deals with device makers like Apple. Separately, the European Commission imposed a nearly $3.5 billion fine over advertising practices. While both cases represent ongoing challenges, investors viewed the U.S. ruling as a relative victory since the company avoided a forced breakup, and shares rose on the news.

The post Just released: the 3 best growth-focused stocks to consider buying in January [PREMIUM PICKS] appeared first on The Twelfth Magpie.

The rally reflects a shift in investor sentiment towards the Google owner.

After spending much of 2023 and early 2024 under pressure from artificial intelligence (AI)-related fears and heavy capital spending, Alphabet has reasserted itself as one of the market’s most powerful compounders. Strong advertising growth, improving margins, and renewed confidence in its AI strategy have all played a part.

TPUs, Gemini and more

But there’s been other factors too. The market’s increasingly interested in Alphabet’s ASICs, particularly its in-house tensor processing units (TPUs). These custom chips are designed specifically for AI workloads, allowing Alphabet to train and deploy large models more efficiently and at lower cost than relying solely on third-party GPUs.

While these TPUs are good for margins and security of supply, the market’s also become interested in the notion that Alphabet could sell them. For example, Meta’s reportedly in talks with Alphabet to buy billions of dollars of these TPUs. Is this a big new revenue stream for the company? Maybe.

However, the real focus should be on Alphabet’s core business. Investors had been worried that ChatGPT and the like would destroy the Search business — that hasn’t happened. Meanwhile, Cloud revenue surged 34%, improving diversification and strengthening the group’s overall resilience.

But there’s also Gemini. Gemini 3.0 — Google’s answer to ChatGPT — has made headlines, simply because it’s very good. I only have one AI app on my phone, and it’s Gemini. There’s probably good reason for that. It leads on reasoning and its image generator — Nano Banana — is really impressive.

What’s else has contributed to this rising share price? Well, a more favourable-than-feared resolution to the US Department of Justice case has helped lift sentiment. Developments in quantum computing — notably the Willow chip — have also reminded the market of Alphabet’s long-term optionality.

While commercial quantum applications remain some way off, progress at this level reinforces the company’s reputation for deep, defensible research that few rivals can match. 

And remember, it’s also a robotaxi leader though Waymo.

The valuation

Of course, the last six months of growth is in the past. Now we need to look to the future.

Where will the stock go next? Well, the value play isn’t quite there anymore. It now trades at 29 times forward earnings and with a price-to-earnings-to-growth (PEG) ratio of 1.93. These are both premiums to the information technology sector average — around 15%-20%.

That doesn’t mean this stock’s overvalued however. Each company has its own merits and investors are starting to see Alphabet as a diversified player with significant stickiness is core businesses — eg Search dominance will remain in tact.

As always, there are risks. A recession, for instance, could result in weaker advertising demand, putting short-term pressure on revenues and margins. Regulatory scrutiny also remains a constant backdrop, particularly in the US and Europe, where changes to competition or data rules could affect how Alphabet operates. 

However, I still believe it’s worth considering for the long run. The valuation data doesn’t scream Buy, but it’s a long-term diversified winner.

The post £10,000 invested in Alphabet shares 6 months ago is now worth… appeared first on The Twelfth Magpie.

One company that seems to like it is Berkshire Hathaway – Warren Buffett’s investment firm. It recently bought around 18m shares in the tech company.

Buffett is investing in AI

Late last week, Berkshire Hathaway filed its 13F report for Q3 with US regulators. These reports reveal what US stocks large investment managers bought and sold in the previous quarter.

Now, the filing shows that Buffett and his team bought and sold a few different stocks over the third quarter. But what jumped out to me (and probably many other investors) in Berkshire’s 13F filing was that it bought Alphabet stock for the first time ever.

We don’t know what price Berkshire paid for the stock (it traded between $176 and $243 during Q3). We also don’t know whether it has bought or sold shares in the tech giant since the end of the quarter.

What we do know, however, is that at the end of Q3, Berkshire owned 17,846,142 Alphabet shares. That position was worth approximately $4.4bn.

My take on this trade

Now, to my mind, Buffett is on to a winner with Alphabet. This company has so much going for it including:

• An extremely dominant market position in internet search globally
• Tons of powerful AI tools such as Google’s AI Overviews and AI Mode that can help fend off ChatGPT (which is a risk)
• Billions of customers using its Gmail, Google Drive, and Google Maps services
• A streaming service (YouTube) that generates almost as much revenue as Netflix
• A cloud computing division that’s growing faster than those of Amazon and Microsoft
• A self-driving car unit that’s generating far more revenue than Tesla’s robotaxis
• A rock-solid balance sheet

And it has been really cheap at times. For example, in Q2 (just before Buffett and his team bought it), it was trading on a price-to-earnings (P/E) ratio of just 17.

At the time, I called it a “value tech stock“. Meanwhile my colleagues Ben McPoland and Dr James Fox said it was “far too cheap” and “on sale“.

I’m just surprised Buffett and his team didn’t buy it earlier. For me, this stock has been a bit of a no-brainer investment for years now.

I first bought it back in 2019. Since then, it has risen more than four-fold.

Worth a look today?

Should investors consider following Buffett into Alphabet if they don’t already own the stock? That’s actually a tricky one.

While I see a lot of long-term growth potential here, the stock has had a huge run in recent months. Since the start of Q3, it has surged from $176 to $276 (a gain of almost 60%).

After that gain, I think it could be worth thinking about waiting for a pullback. I reckon that with a bit of patience, investors will be able to get it cheaper.

That said, some of my colleagues still see value in the stock today.

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Revenue surged 16% year-on-year to $102.3bn — the first time Alphabet has crossed the $100bn quarterly mark — while net income climbed 33% to nearly $35bn. Earnings per share rose 35% to $2.87, well ahead of analyst forecasts of $2.27.

This is quite an astonishing beat for a mega-cap stock. Just remember, there were something in the region of 40 analysts forecasting this quarter. And their collection earnings projection was just so far under the reported figure.

CEO Sundar Pichai credited Alphabet’s “full stack approach to AI”, highlighting the rapid rollout of AI Overviews and AI Mode in Search, as well as Gemini’s 7bn-token-per-minute processing capacity.

Google Cloud remained a standout performer, growing 33.5% to $15.2bn and ending the quarter with a $155bn backlog.

But the broader business just looks so robust too. The company boasts over 300m paid subscriptions and momentum across all segments. This confidence has allowed it to raise its capital expenditure guidance to $91bn–$93bn as the firm invests aggressively in artificial intelligence (AI) infrastructure.

Catalyst after catalyst

Back in April following Trump’s Liberation Day tariffs, Alphabet appeared vastly undervalued — at least to me and many of my Motley Fool colleagues.

Back then, Edward Sheldon (among others including Ben McPoland and Cliff D’Arcy) cited the company’s highly appealing value proposition and relatively low risk profile. Ed even called it a “value tech stock”, which was super accurate.

Also in April, I wrote that the price-to-earnings-to-growth (PEG) ratio of 1.1 represented a huge discount to the information technology sector average. Since then, the company’s experienced catalyst after catalyst.

Concerns over the US antitrust case and the rise of ChatGPT once weighed heavily on sentiment, particularly as investors questioned whether generative AI might erode Google’s Search dominance.

Q2 earnings however, helped steady confidence. It showed ad revenue and a sharp rebound in operating margins as AI tools began enhancing, not undermining, core products.

There have also been impressive announcements related to its quantum programmes, spiking investor interest.

The stock’s gone on to almost double since April. In fact, given some currency fluctuations, those UK investors who bought the stock then may have seen a 100% return.

What about now?

On the face value, the stock now trades at 27 times forward earnings and has a PEG ratio of 1.8. However, the recent outperformance is yet to be taken into account. I’d suggest it’s probably trading close to 24.5 times forward earnings and the PEG ratio will probably — if my calculations are correct — be closer to 1.5.

This is still a discount to the information technology sector average, and suggests the stock could push higher. There may also be a FOMO aspect to consider — Alphabet is a winner in AI, cloud technologies, search, autonomous driving, and even quantum computing.

However, some risks remain, including what AI may do to traditional search. An economic downturn, which isn’t off the cards, would also hurt ad spending.

Personally, I still believe Alphabet’s worth considering. It’s now my largest holding, just.

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