Nvidia, the American microchip company and the most valuable public company in the world, announced record revenues of $57 billion in the third quarter of 2025, surpassing Wall Street forecasts. The company expects its revenue to rise again to $65 billion in the latter part of the year.
These better-than-expected results reassured global investors after a turbulent week for Nvidia and growing concerns about the bursting of the artificial intelligence (AI) bubble.
Just a few weeks ago, Nvidia became the first company valued at more than $5 trillion, surpassing the other members of the group of the “magnificent seven” technology: Alphabet (owner of Google), Amazon, Apple, Tesla, Meta and Microsoft.
Nvidia shares rose more than 5% to $196 in after-hours trading immediately after the results were released.
Over the past week, news broke that tech billionaire Peter Thiel’s investment fund had sold its entire stake in Nvidia in the third quarter of 2025: more than half a million shares, worth approximately $100 million.
But in that same quarter, an even more famous billionaire’s firm made a surprising investment in Alphabet, demonstrating its confidence in Google’s ability to profit from the age of artificial intelligence.
Buffett’s new participation in Google
Headquartered in Omaha, Nebraska, United States, Berkshire Hathaway is a global investment giant, led for decades by 95-year-old veteran Warren Buffett.
Berkshire Hathaway’s latest quarterly report reveals that the company built up a $4.3 billion stake in Alphabet during the September quarter.
The magnitude of the investment suggests a strategic decision, especially considering that the same report showed that Berkshire had significantly reduced its huge position in Apple. (Apple remains Berkshire’s largest single holding, currently worth about $64 billion.)
Buffett is about to step down as CEO of Berkshire. Analysts speculate that this investment could offer a clue, before his retirement, as to where sustainable profits could emerge in the digital economy.
Buffett’s track record of getting companies with sustainable competitive advantages right
Buffett got many investments right over the decades, from American Express to Coca-Cola.
However, he always expressed skepticism towards technology companies. He also has a history of failing in big technology bets, especially with his disappointing investment in IBM a decade ago.
Following the recent departure of Peter Thiel and Masayoshi Son, Japan’s richest man, from Nvidia, it might be tempting to think that the “Oracle of Omaha” appears just as the party is ending.
But this interpretation misunderstands Buffett’s investment philosophy and the nature of Google’s business.
Buffett is not late to AI. He is doing what he has always done: betting on a company that he believes has a “sustainable competitive advantage”: an inherent advantage that keeps the competition at bay.
Their firm’s latest move indicates that they see Google’s competitive advantage expanding in the era of generative AI.
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Two pillars in Google’s competitive advantage
Google won the search engine war in the late 1990s because it excelled in two key areas: reducing the cost of search and mastering the legal framework.
Over the years, those advantages act as pillars of Google’s competitive advantage, keeping the competition at bay.
Google understood earlier and better than anyone that reducing the cost of searching—the time and effort required to find reliable information—was the Internet’s main economic opportunity.
The company’s founders, Sergey Brin and Larry Page, started with a revolutionary search algorithm. But the real innovation was the business model that emerged next: offering free searches and then auctioning highly targeted advertising alongside the results.
Google Ads currently generates tens of billions of dollars a year for Alphabet.
But establishing that business model was not easy. Google had to navigate pre-Internet intellectual property laws and global unease about change.
The search giant has avoided copyright and trademark lawsuits and managed the attention of international regulatory bodies, protecting its brand from scandals.
These business strengths will be crucial as generative AI transforms the way we search and generates a new wave of scrutiny over intellectual property.
Berkshire Hathaway is likely to view Google’s track record in these areas as an advantage that its rivals cannot easily replicate.
What would happen if the AI bubble burst?
Perhaps the genius of Berkshire’s investment lies in recognizing that if the AI bubble bursts, it could take some of the seven tech giants with it, though perhaps not the most resilient.
Consumer-facing giants like Google and Apple would likely weather an AI collapse well. Google’s core advertising business weathered the 2008 global financial crisis, the Covid-19 crisis, and the 2022 inflationary bear market.
By contrast, new mega-caps, like Nvidia, could struggle in a recession.
There is still a good chance that something could go wrong.
There is no guarantee that Google will be able to capitalize on the new AI economy, especially with so many regulatory and intellectual property risks underway.
The Google brand, like Buffett, might simply get old. Young people use search engines less and less and turn more to AI or social networks to get answers.
New technologies, such as agent-assisted shopping or recommendation systems, can increasingly do without searches altogether.
But with its vast online advertising resources, its experience since the dawn of the commercial internet, and its ability to use its platforms to foster new habits among its vast user base, Alphabet is far from a bad bet.
*Cameron Shackell is a Research Associate, Center for the Future of Policy at the University of Queensland and the Queensland University of Technology.
This text was originally published in The Conversation
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