3 Reasons to Buy Buffett's Favorite AI Stock

Alphabet Inc. (NASDAQ: GOOGL) — the parent of Google, YouTube, and Google Cloud — is drawing fresh attention after Berkshire Hathaway's new CEO Greg Abel agreed to buy an additional $10 billion in shares through a private offering, pushing Berkshire's total stake past $30 billion. The move signals that Buffett's successor sees the same value the legendary investor spotted when he initiated the position in late 2025.

At a Glance

• GOOGL closed at $346.13 on June 21, 2026, down 0.43% on the day
• 52-week range: $295.18 – $408.61; market cap $4.49 trillion
• P/E ratio: 31.73 | EPS implied | dividend yield: 0.25%
• Berkshire's stake now exceeds $30 billion following the latest block purchase
• Google Cloud revenue grew 63% year over year in Q1 2026

Why Berkshire Keeps Buying

Alphabet's advertising machine is the envy of the industry. In 2025, ad revenue accounted for more than 70% of the company's total sales, and it's not hard to see why: Google Search remains the default starting point for most of the world's internet traffic. Seven of Alphabet's products — Search, YouTube, Gmail, Android, Maps, and two others — each count at least 2 billion monthly active users. That kind of reach is almost impossible to replicate from scratch.

High-margin subscription businesses add another cushion. Google One and YouTube Premium together have 350 million paying subscribers, and those recurring dollars drop cleanly to the bottom line. Over the trailing twelve months ending March 31, 2026, Alphabet reported $160 billion in net income on $423 billion in revenue — numbers that explain the Berkshire team's enthusiasm even at current prices.

The AI Engine Underneath Everything

The advertising dominance is well understood. What's less discussed is how billions of daily user interactions — searches, clicks, video watches, map queries — continuously feed Alphabet's Gemini AI models. Every helpful response a user selects and every query Gemini gets wrong becomes training data. Scale like that is genuinely hard to replicate, and it's what makes Google's AI flywheel spin faster than most competitors can match.

Gemini's improvements are also pulling enterprise customers toward Google Cloud. Cloud is now Alphabet's fastest-growing segment, contributing 18% of total revenue in Q1 2026 after posting 63% year-over-year growth. That momentum shows up in the overall top-line numbers too: total revenue grew 22% year over year in Q1 2026, a meaningful acceleration from 12% growth in Q1 2025 and 15% in Q1 2024.

Capital spending on chips and data centers is heavy right now, but those assets carry multiyear useful lives. As revenue scales over the infrastructure already being built, the unit economics tend to improve — which is exactly the kind of operating leverage that long-horizon investors prize.

What the Numbers Say

Valuation: At $346.13, GOOGL trades at a P/E of 31.73 on a trailing basis and around 26 times forward earnings, according to the source data. For a company growing revenue at 22% annually with $160 billion in trailing net income, that's not a stretched multiple — though it's not cheap either.

Momentum: The RSI of 37.25 puts GOOGL close to oversold territory. The stock sits 15% below its 52-week high of $408.61, having pulled back from what was a very strong run. Whether that represents a buying opportunity or the start of a longer consolidation is the central debate right now.

Yield: The 0.25% dividend yield is token-level for income investors — this is a growth story, full stop. Alphabet only initiated its dividend recently, and the payout remains symbolic relative to earnings.

Bull Case

The bull case rests on three pillars: a near-unassailable position in online advertising, an AI feedback loop that compounds with scale, and a cloud business that's just hitting its stride. Revenue growth is reaccelerating, and Berkshire's continued buying at these levels provides a notable vote of confidence from one of the most disciplined capital allocators in history.

Bear-Case Risks

The risks are real. Regulatory pressure on Google's search monopoly is an ongoing legal overhang, and AI-native competitors — OpenAI's search features among them — are chipping away at Google's traditional query volume. Capital expenditure is also running at historic highs; if cloud growth disappoints, the spending binge will look less prescient. And at a $4.49 trillion market cap, the law of large numbers makes truly outsized future returns harder to achieve.

Frequently Asked Questions

Why is Berkshire Hathaway buying more Alphabet stock?

Berkshire initiated its Alphabet position in late 2025 under Warren Buffett and has continued adding shares under new CEO Greg Abel. The latest $10 billion private-offering purchase brings the total stake above $30 billion, suggesting the leadership team views current prices as attractive relative to Alphabet's long-term earnings power.

What is Alphabet's current P/E ratio?

As of June 21, 2026, GOOGL carries a trailing P/E of 31.73. On a forward basis, the shares trade at roughly 26 times expected earnings.

Does Alphabet pay a dividend?

Yes, but it's modest. The current dividend yield on GOOGL is 0.25%, reflecting the fact that Alphabet prioritizes reinvesting its cash flow into AI infrastructure and share buybacks rather than income distributions.

What is Google Cloud's growth rate?

Google Cloud grew 63% year over year in Q1 2026 and now represents 18% of Alphabet's total revenue, making it the company's fastest-growing business segment.

Where Things Stand

GOOGL at $346.13 sits in the lower half of its 52-week range, with an RSI suggesting the selling pressure has been meaningful. Berkshire's fresh commitment of $10 billion at these levels is hard to ignore as a data point. The company's financials are genuinely exceptional — $160 billion in net income, accelerating revenue growth, and a cloud business that's barely started flexing. The question isn't whether Alphabet is a quality business. It's whether the current price already reflects the optimistic scenario, and how much patience you have if the AI regulatory and competitive headwinds intensify before they clear.