Key Points
Berkshire’s final big stock purchase under Buffett was Alphabet.
Alphabet is one of the few companies that can own and monetize AI globally.
- 10 stocks we like better than Alphabet ›
Many investors followed Warren Buffett's stock purchases for Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) for fresh investing ideas. Many of its top holdings -- including Apple, American Express, and Coca-Cola -- have been reliable long-term winners that easily withstood recessions and other macro headwinds.
Before stepping down as Berkshire's CEO at the end of 2025, Buffett approved one final major new investment for that portfolio: Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). That investment was surprising because Buffett had avoided tech stocks for most of his career; he sold many of Berkshire's other top holdings in 2025, and Alphabet still faces macro and regulatory headwinds. However, I also believe it's a compelling long-term buy for one simple reason: AI.
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Why is Alphabet the ultimate AI stock?
Alphabet, the parent company of Google, is one of the few companies that can both own and monetize AI at a global scale. By comparison, many AI companies have promising AI tech but lack clear distribution and monetization strategies. Others have massive distribution capabilities, but they're dependent on the AI algorithms and infrastructure of other companies.
Google doesn't have either problem. It's already a full-stack AI infrastructure company that produces its own chips (TPUs), large language model (Gemini), a cloud platform, and other apps. Its massive ecosystem -- including Google Search, YouTube, Android, and Chrome -- enables it to instantly distribute its new AI features to billions of users worldwide.
Therefore, AI isn't an existential threat to Google's core businesses. Instead, AI refines its search results, improves its targeted ads, and connects more businesses to its cloud infrastructure platform. It's also firmly profitable and generates most of its revenue from its higher-margin advertising business, so it can easily afford to expand its more capital-intensive cloud and AI features. Those strengths give it a much stronger foundation than other AI companies, and should make it a reliable stock to buy and hold as the market expands.
Why would Buffett consider Alphabet a worthy investment?
Berkshire purchased 17.8 million shares of Alphabet in the third quarter of 2025, when the stock had an average closing price of $209.06 per share. Today, the stock trades at more than $350.
From 2025 to 2028, analysts expect Alphabet's revenue and EPS to grow at CAGRs of 16% and 13%, respectively, as the cloud and AI boom continues. Its stock still looks reasonably valued at 26 times next year's earnings.
While Buffett hasn't publicly commented on Alphabet after Berkshire's big purchase, the tech giant's robust growth, wide moat, and attractive valuation make it comparable to many of the conglomerate's other top holdings. Therefore, it's still a great stock to buy and never sell.
Should you buy stock in Alphabet right now?
Before you buy stock in Alphabet, consider this:
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American Express is an advertising partner of Motley Fool Money. Leo Sun has positions in Apple and Coca-Cola. The Motley Fool has positions in and recommends Alphabet, American Express, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
