Google's Capital Pivot: When a 33-Quarter Buyback Streak Ends, Berkshire Steps In

Alphabet ends 33-quarter buyback streak to fund $200B AI capex, while Berkshire and other giants raise stakes, signaling long-term confidence.

The most telling signal about Alphabet's current trajectory isn't in any of its earnings calls or product announcements. It's in what the company has quietly stopped doing. After 33 consecutive quarters of repurchasing its own stock — a ritual that had become as predictable as the Google search page itself — the buyback machine ground to a halt. Zero dollars in Q1 2026. Zero again in Q2. Compare that with the $13.24 billion returned to shareholders in the same quarter a year earlier, and the first half of 2026 shows a complete shutdown of repurchases versus $28.31 billion in the comparable 2025 period.

The arithmetic behind that pause is straightforward: Alphabet has redirected its cash toward a capital expenditure plan of $195 to $205 billion for 2026, with management signaling another significant step-up in 2027. When you're pouring that much into data centers, chips, and AI infrastructure, there's simply less left over for the buyback crowd.

Buffett's Counterweight

Yet even as Alphabet closes one door for shareholders, another has swung open — pushed by the most famous investor in the world. Warren Buffett's Berkshire Hathaway added $17 billion to its Alphabet position during the second quarter, lifting the stake to $37.77 billion as of June 30 and making the Google parent Berkshire's third-largest public holding, edging past Coca-Cola's $32.51 billion. Reports indicate Buffett himself initiated the move, while his designated successor Greg Abel was simultaneously acquiring Taylor Morrison for $6.8 billion.

The institutional enthusiasm extends well beyond Omaha. Vanguard raised its position by 2.4% to more than 528 million shares, with State Street and Geode Capital also adding. Norway's central bank disclosed a new position worth roughly $30.5 billion, and smaller managers including Axon Capital, 71 West Capital Partners, and Golden Reserve Retirement either initiated or increased their stakes. The sellers were comparatively few — Eaton Financial Holdings and Foster & Motley trimmed — while insiders offloaded $12.38 million worth of stock over the past three months, including Chief Accounting Officer Marsida Saraci.

The contrast with other prominent investors is striking. Bill Ackman exited his Alphabet position entirely during the same quarter, rotating into Microsoft and Meta Platforms — though he still acknowledges the company's long-term AI potential across TPUs, Chrome, Android, and search advertising. Li Lu's Himalaya Capital, by contrast, has Alphabet representing nearly half of its entire portfolio, antitrust proceedings and AI competition notwithstanding.

The Capital Machine Behind the AI Bet

The investor inflows arrive as Alphabet mobilizes its balance sheet on a scale that would have seemed implausible just a few years ago. Early June brought an $80 billion capital raise — $30 billion via public offering, $40 billion through an ATM program, and $10 billion in a private placement to Berkshire Hathaway. The company is also reportedly exploring its first-ever yen-denominated bond issue, potentially worth several hundred billion yen, with Mizuho, Bank of America, and Morgan Stanley on board. Early August saw a $25 billion bond issuance close.

The justification for this capital hunger sits in the cloud division. Google Cloud's order backlog has reached $514 billion, while its operating margin has improved from 20.7% to 35.6% — numbers that give management ammunition for the spending spree.

There's a chip strategy woven through all of this. In late July, Alphabet secured the contractual right to acquire up to $12.2 billion in Marvell shares in exchange for chip purchases tied to the TPU ecosystem, AI inference accelerators, and storage controllers. Waymo, meanwhile, is now running its robotaxis on a custom ASIC chip manufactured at TSMC's 5-nanometer process, delivering more than 1,000 TOPS and reducing dependence on Nvidia. The through-line is clear: Alphabet wants to own its semiconductor destiny rather than merely rent it.

Leadership Shifts and Market Jitters

The transformation extends to the executive suite. Early August brought the departure of Jeff Dean, a 27-year Google veteran and most recently Chief Scientist, who left amicably to found Discovery Loop — with Alphabet as a founding investor and cloud partner. Demis Hassabis has stepped back from operational leadership of Google DeepMind to become chairman of DeepMind and Chief Scientist of Alphabet, with Koray Kavukcuoglu now running day-to-day operations and reporting directly to Sundar Pichai on Gemini model development.

The market's reaction to the reshuffle was telling: shares briefly dropped four to five percent, erasing around $190 billion in market value. The company framed the changes as orderly and consensual, but the selloff revealed how sensitive investors have become to any sign of movement in Google's AI leadership ranks — precisely when Alphabet is betting more capital than ever on that team's success.

A Valuation Caught Between Two Forces

The stock currently trades around 15% below its 52-week high of €350.75, while remaining roughly 70% above its August low. The latest session brought a 1.1% gain to €298.55, with the shares up about 3.9% over the past 30 days. The price sits below the 50-day average of €305.93 and beneath the 200-day average of €288.01 — evidence that the market is still digesting the implications of the capital raises and added leverage.

For investors, the picture is genuinely two-sided. On one hand, Berkshire Hathaway and a broad institutional base are voting with their wallets, betting on continued cloud and advertising growth. On the other, the enormous cash outflows for data centers and chips are weighing on near-term balance-sheet metrics, and the buyback pause marks a real shift in how Alphabet treats its shareholders.

The question for coming quarters isn't whether Alphabet will invest in AI — that's settled. It's whether the company will resume returning capital to shareholders once this investment wave crests, and whether the chip sovereignty strategy translates into the earnings growth that justifies the spending. Until then, the defining image of this summer is a company simultaneously courting the world's most famous value investor while fundamentally rewiring its relationship with everyone else who owns its stock.