Berkshire’s Alphabet Bet: Tom Russo Crowns It a ’Winner’ While Sounding Alarm Bells
Berkshire Hathaway's massive Alphabet position gets the superstar treatment from longtime investor Tom Russo—but the veteran isn't handing out participation trophies to the rest of the portfolio.
The Bull Case That Can't Be Ignored
Russo's analysis reveals Alphabet's dominance in digital advertising and cloud computing creates a cash-generation machine that even traditional value investors can't overlook. The search giant's ecosystem locks in users while its AI capabilities position it for the next decade of growth.
Warning Shots Across the Bow
Meanwhile, Russo fires sharp critiques about Berkshire's other holdings facing structural challenges. Legacy businesses getting disrupted by technology drew particular scrutiny—because apparently even Warren Buffett isn't immune to the 'this time it's different' trap that snags most traditional finance dinosaurs.
The verdict? One home run doesn't win the ballgame—especially when the rest of the lineup is swinging at pitches from 1998.
Tracking Berkshire’s timing and Alphabet’s jump
Tom said Alphabet still trades at a “below-market” price-to-earnings ratio even after the run-up. He described the company as a “remarkably solid and strong business.” He pointed to Alphabet’s track record of taking pain in the short term to build for the long run. Tom said the company has a “capacity to suffer,” meaning it spends heavily on long-term projects and doesn’t bend to Wall Street’s push for smooth numbers every quarter.
Tom said Alphabet’s commitment to research and development is something he and his team “look right through” as they judge its future power. He said they also “applaud” Alphabet’s choice to keep funding “moonshots,” the risky bets that may take years to pay off.
He said Alphabet holds a “mountain of cash” like Berkshire because its operations bring in strong cash flow. He added that Alphabet’s role in AI could bring very large returns.
Tom then said there is a real chance Alphabet’s huge AI spending won’t produce the kind of scalable returns that “drive the payback.” Alphabet projected that its capital spending in 2025 will top $90 billion.
He also said the era of “extraordinary margins” for the search business might be ending, even though Alphabet upgraded its search features with Gemini AI.
He pushed back against people calling Alphabet only a tech company. He said it plays a critical role in helping companies reach customers in more precise and effective ways. “You get that right and people beat a path to your door,” he said.
Tom added that Alphabet is “deeply embedded in the commerce of the world,” which he believes can help it handle new competitors even if those rivals have better tools.
Warning about debt and market disruption
Tom then moved to what he thinks is an even bigger threat than an AI crash. He said the surge in U.S. national debt could be “potentially more disruptive” than anything happening in tech. U.S. debt was under $20 trillion in 2016. It is now above $38 trillion, based on Treasury data.
Tom said the “pressure” of paying that debt, along with rising concerns about the dollar’s place as the world’s reserve currency, could lead to a weaker dollar.
He said the most “unexamined” risk sits in the bond and currency markets, and in the global political picture.
“Those who hold our claims have interests that go far beyond just lending to the US, but really supplanting it,” said Tom.
He added that America’s leadership helped lift living standards at home and supported global stability. Pulling back now could block more gains and create new instability.
Tom finished by paraphrasing Charlie Munger. “Never should somebody give their consumer the opportunity, the incentive to look elsewhere for satisfaction,” he said.
Get up to $30,050 in trading rewards when you join Bybit today
