Key Points
-
Alphabet is a top AI stock and one of Berkshire Hathaway’s largest holdings today.
-
AI is fueling accelerating growth across Google and Google Cloud.
-
Meanwhile, Alphabet’s full AI stack is a huge competitive advantage moving forward.
- 10 stocks we like better than Alphabet ›
Billionaire and legendary investor Warren Buffett is famous for his aversion to technology stocks. That’s why most investors assumed that new leadership at Berkshire Hathaway had spearheaded the holding company’s large investment in Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) beginning in 2025’s third quarter. However, Buffett recently revealed in a CNBC interview that he had initiated the investment.
Considering Alphabet has become one of Berkshire Hathaway’s five largest holdings, it’s certainly no stretch to call the tech giant Buffett’s favorite artificial intelligence (AI) stock. When you dive into the business, it’s easy to see the appeal.
Here are two reasons investors might want to buy the stock and never sell it.
1. AI is turbo-charging Alphabet’s existing businesses
Unlike most companies that pour capital into AI and hope the profits will follow, Alphabet is seeing immediate returns on its investments. Alphabet’s core business, Google Search, grew revenue by 19.1% in the first quarter of 2026 versus 9.8% the year-ago quarter. Google Search now generates AI overviews, which management has noted is driving higher traffic.
AI is also funneling significant business to Google Cloud. Cloud revenue grew by 63% in the first quarter to $20 billion, a sharp acceleration from 28% a year ago. Google Cloud is also emerging as a major profit center for the company, which has historically depended on digital ads for its profits. Operating income has more than tripled from a year ago, reaching nearly $6.6 billion in the first quarter. Google Cloud could add tens of billions of dollars to Alphabet’s bottom line as Cloud continues to grow alongside rising AI adoption.
2. Alphabet’s AI stack gives it an edge
The company has also successfully leveraged its ecosystem to compete in the AI space. By weaving Gemini into Chrome, Android, Google, Gmail, and other products, Alphabet has become a genuine threat to OpenAI and Anthropic. Gemini currently has an estimated 750 million active users.
Importantly, Alphabet is a full-stack AI company. It has all the ingredients for AI, including its own models, infrastructure to run them, a distribution network through its various successful products, and tons of first-party data to continue developing and improving its models. There’s arguably no other company that has that combination. Even mighty Microsoft, which boasts strong enterprise relationships, has struggled to attract users to its Copilot AI app.
Alphabet’s stranglehold on digital consumers should pay dividends, both figuratively and literally, for years to come. It owns YouTube, the world’s top video platform, and Waymo, a fast-growing autonomous ride-hailing service. Alphabet is a quintessential do-it-all AI stock, and given its many recognizable consumer-facing brands and products, it’s right up Buffett’s alley, even if it is a technology company.
Should you buy stock in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $371,842!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,244,783!*
Now, it’s worth noting Stock Advisor’s total average return is 900% — a market-crushing outperformance compared to 207% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Justin Pope has positions in Alphabet and Microsoft. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, and Microsoft. The Motley Fool has a disclosure policy.
