Alphabet as the Sequoia Fund's largest holding — the successor to the legendary Buffett-connected fund sees Google as the defining information monopoly of the 21st century
Robert Goldfarb
Ruane, Cunniff & Goldfarb (Sequoia Fund)
“Robert Goldfarb/Sequoia Fund: 'We look for businesses with durable competitive advantages that can compound at above-average rates for many years. Alphabet's search monopoly and AI leadership position it for decades of continued growth.'”
The Business
- Alphabet is the parent company of Google, operating the dominant search engine (90%+ share), YouTube (2.5B MAU), Google Cloud (#3), and Android (3B+ devices)
- Digital advertising generates ~77% of revenue, with Google Cloud and other bets providing diversification and growth
- DeepMind is one of the world's most advanced AI research labs, with Gemini models integrated across all Google products
- FY2025: $403B revenue, $132B net income, 32% operating margin, $73B free cash flow
Why They Own It
“Robert Goldfarb/Sequoia Fund: 'We look for businesses with durable competitive advantages that can compound at above-average rates for many years. Alphabet's search monopoly and AI leadership position it for decades of continued growth.'”
- Sequoia Fund — the legendary Buffett-connected fund — has Alphabet as its largest holding, reflecting the highest conviction possible
- Google Search's 90%+ market share has proven resistant to every challenger for 25 years — including the AI chatbot threat
- FY2025: $403B revenue (+15%), $132B net income, $73B FCF — exceptional profitability at extraordinary scale
- The Sequoia Fund's quality-oriented, long-term approach sees Alphabet as a modern Coca-Cola — a permanent compounder
- DeepMind/Gemini AI and Google Cloud provide significant growth optionality beyond the core advertising business
What the investor sees
Alphabet trades at approximately 28x trailing earnings. The Sequoia Fund's philosophy emphasizes quality over cheapness — they are willing to pay fair prices for exceptional businesses. At 15%+ revenue growth and 32% operating margins, Alphabet's earnings are growing fast enough to support the multiple. The fund's long holding period (typically 5-10+ years) means current valuation is less important than the durability of competitive advantages.
Financial Snapshot
$403B
revenue FY2025
$132B
net income
$10.82
eps
32%
operating margin
$73B
free cash flow
15% YoY
revenue growth
90%+
search market share
2.5B
youtube mau
The Moat
- Search monopoly — 90%+ global market share sustained for 25 years against every challenger
- YouTube video platform dominance — 2.5B MAU with irreplaceable creator ecosystem
- Android — 3B+ active devices controlling the mobile OS layer
- DeepMind/Gemini AI — among the deepest AI research capabilities in the world
- Distribution moat — default search deals with Apple, Samsung, and browser makers
- Data flywheel — user data improves AI models, which improve products, which attract more users
What Could Go Wrong
DOJ antitrust case potentially forcing structural remedies
AI chatbot competition from ChatGPT/OpenAI reducing search queries
Massive AI capex with uncertain returns
Advertising cyclicality — 77% of revenue from digital ads
Catalysts
- Gemini AI monetization across Search, Workspace, and Cloud
- Google Cloud 30%+ growth approaching profitability inflection
- Waymo autonomous vehicles — market leader in self-driving
- $70B buyback authorization reducing share count
- YouTube Connected TV and Shorts monetization
In Their Own Words
“Sequoia Fund: 'Google Search is one of the most remarkable business franchises in history. Over 25 years, no competitor has ever sustained market share above 5%. That kind of dominance is extraordinarily rare.'”
“Sequoia Fund: 'Our concentrated portfolio reflects our conviction. When we find a business we believe in deeply, we are willing to allocate a meaningful portion of capital to it.'”