Warren Buffett Successor Greg Abel Just More Than Tripled…

Why the stake makes sense

Alphabet has been firing on all cylinders. First-quarter revenue rose 22%, or 19% in constant currency, to $109.9 billion. That marked an acceleration from 18% growth in the fourth quarter of 2025 and 16% growth in the third quarter of 2025, and it was the company’s fastest growth pace in more than two years. Indeed, Q1 was Alphabet’s 11th consecutive quarter of double-digit growth.

Further, Alphabet’s first-quarter operating income jumped 30% to $39.7 billion, and the company’s operating margin expanded two percentage points to 36.1%.

Of course, Google Cloud remains a major catalyst for Alphabet. The cloud computing segment’s revenue jumped 63% to $20 billion — a sharp acceleration from 48% growth in Q4 of 2025 and 34% growth in Q3 of 2025. Even more impressive, the segment’s operating margin nearly doubled to 32.9% from 17.8% in the year-ago period, and operating income tripled to $6.6 billion. And the backlog — a rough proxy for future revenue under contract — almost doubled in just three months to $462 billion.

“Our Enterprise AI solutions have become our primary growth driver for Cloud for the first time,” Alphabet CEO Sundar Pichai said during the company’s first-quarter earnings call. “In Q1, revenue from products built on our gen AI models grew nearly 800% year over year.”

Meanwhile, Alphabet’s core advertising machine looks anything but disrupted. Search and other advertising revenue rose 19% to $60.4 billion. YouTube ads grew 11%. And paid subscriptions across YouTube, Google One, and Gemini reached 350 million.

But there are risks worth monitoring.

Capital spending in the first quarter alone totaled $35.7 billion, and management raised its full-year 2026 capital spending guidance to a range of $180 billion to $190 billion — with chief financial officer Anat Ashkenazi adding that 2027 capital expenditures will “significantly increase compared to 2026.” That kind of outlay creates real pressure on free cash flow and depreciation expense — and it leaves little margin for error if AI demand were to cool meaningfully.

Alphabet Stock Quote

NASDAQ: GOOGL

Alphabet

Today’s Change

(-1.15%) $-4.60

Current Price

$396.47

Key Data Points

Market Cap

$4.8T

Day’s Range

$393.18 – $399.55

52wk Range

$162.00 – $403.70

Volume

678K

Avg Vol

29M

Gross Margin

60.43%

Dividend Yield

0.21%

But is the stock still a buy?

The challenge for new investors is that Alphabet s aren’t trading at the bargain they were when Berkshire initiated the position last fall. Berkshire’s initial Alphabet position was valued at about $243 per at the end of the third quarter. As of this writing, s trade at about $393, with the stock up about 25% year to date.

That said, the stock’s valuation still looks reasonable for a business growing this fast. Alphabet’s price-to-earnings ratio sits around 30 — only a modest premium to its five-year average of about 24. Given the company’s accelerating revenue growth, expanding margins, and a cloud business that may now be its key earnings driver over time, the valuation multiple could prove a fair price for what investors are getting.

One way to think about it: Buffett (and probably now Abel) typically demands a wide margin of safety before initiating a position in a stock. So, the fact that Berkshire chose to substantially add to the position rather than trim it (or even sell it) — as the conglomerate did with several other long-standing holdings — suggests Abel and Co. see great long-term potential for the business, even from this level.

Still, this isn’t a screaming bargain. The easy money in the stock has ly already been made, and investors should keep in mind that the company’s escalating capital outlays could weigh on near-term free cash flow. But for those who don’t already have exposure to the search and AI giant, a small starter position may make sense at current levels — with room to add on any meaningful pullback.