Warren Buffett said Alphabet (GOOGL) is likely to outperform 90% to 95% of Wall Street stock picks, calling the tech giant a rare winner in a market driven by salesmanship. The Berkshire Hathaway chairman made the comment on CNBC's Squawk Box on Wednesday, sending Alphabet shares up 3.65% to $370.36. Berkshire's Alphabet stake now exceeds $31 billion, making it the third-largest holding behind Apple and American Express.
Buffett Reveals He Initiated the Bet
For months, investors speculated that Berkshire's new CEO Greg Abel was behind the Alphabet investment. Buffett ended that debate in two words: "I initiated." He added that Abel still has the final say, and the two speak daily and approve each other's moves. Abel outlined Berkshire's narrow AI plans at the shareholder meeting in May.
Berkshire built its Alphabet position in three stages. It began buying in Q3 2025 and continued through early 2026. Then in June, Berkshire purchased $10 billion more in a private placement tied to Alphabet's $80 billion AI capital raise. According to Alphabet's SEC filing, Berkshire paid $351.81 per Class A share and $348.20 per Class C share. Buffett also admitted a mistake: skipping Google in its early, lower-cost years.
AI Spending Is 'Real Money'
Buffett did not downplay the risks. He noted that Alphabet alone plans $180 billion to $190 billion in capital spending this year, with more in 2027—far exceeding what railroads ever spent. "It's real money," he said. But the record backs his confidence: Alphabet's Q1 revenue grew 22% to $110 billion, Google Cloud sales surged 63%, and the company generated $174 billion in operating cash flow over the past year.
Still, Buffett's praise had limits. He said he likes at least four or five other Berkshire businesses more. He also criticized analysts for focusing on the next quarter instead of long-term returns. His last big tech bet, Apple in 2016, became Berkshire's largest and most profitable holding. Alphabet recently joined the Dow Jones Industrial Average, while institutional money continues rotating into stocks amid the crypto downturn.
Meanwhile, several billionaires have picked Amazon as their top AI trade. Alphabet's earnings later this month will test whether the "Buffett bump" holds.