Warren Buffett Bought Alphabet Stock About a Year Ago. 3 Reasons It’s Still a Buy Today

In the third quarter of 2025, Berkshire Hathaway (NYSE:BRKA) (NYSE:BRKB) initiated a position in Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL). The conglomerate has doubled down since and now has Alphabet as one of its top five holdings. What's perhaps most surprising is that Warren Buffett was behind this stock purchase, according to the man himself, despite his long-standing reputation for not investing in tech stocks. Alphabet has performed well over the past 12 months, but there is still plenty of upside ahead for investors focused on the long game. Let's consider three reasons why the stock is still a buy.

1. Alphabet's cloud business is soaring

Alphabet is best known for its search engine, Google. The company is by far the leader in this industry and generates a substantial portion of its sales from its Google advertising business. YouTube, which Alphabet also owns, contributes meaningfully as well, still mostly through ads. However, in recent quarters, Alphabet's most important growth driver has arguably been its cloud computing business, Google Cloud.

In the second quarter, Alphabet's total revenue was $119.8 billion, up 24% year over year. The company's cloud business posted $24.8 billion in sales, up 82% compared to the year-ago period. Alphabet's cloud sales growth has accelerated recently. The company doesn't have the largest market share in the industry, but it is particularly strong in offering some artificial intelligence (AI) services. Alphabet is doubling down.

The company increased its 2026 capex guidance to $195 billion to $205 billion, up from its previous estimate of $180 billion to $190 billion. Meanwhile, demand for AI computing capacity doesn't seem to be slowing, and Alphabet's massive backlog -- $514 billion at the end of the second quarter -- points to sustained demand for its services. These are all strong signs that the company's biggest growth driver will continue performing well over the medium term.

2. Plenty of other growth opportunities

Alphabet's advertising and cloud computing businesses are doing well. It has other meaningful revenue sources, such as subscriptions, that also contribute. But the company also has attractive long-term potential. Consider Waymo, Alphabet's subsidiary that specializes in self-driving vehicles. Waymo operates in more than a dozen U.S. cities and has a larger robotaxi fleet than Tesla(NASDAQ:TSLA), the leader in electric vehicles.

The robotaxi industry is still in the early innings. Still, Waymo's massive fleet (compared to other players in the market) gives it a competitive advantage, as it uses data from real-world situations to train and improve its self-driving software. The more cars on the roads, the more data the company has. Building autonomous vehicles and training the appropriate software they operate on is expensive.

But if Waymo can scale sufficiently over the next decade and achieve significant utilization as self-driving technology gains popularity, Alphabet could generate meaningful revenue from this business. There are other opportunities the company could pounce on as well. Alphabet's future looks bright because the company is constantly looking to improve its business.

3. Alphabet escapes a catastrophic outcome, again

Alphabet has been facing antitrust lawsuits in the U.S. Perhaps the worst possible outcome for the company is not only to be found guilty of operating an illegal monopoly (which has already happened) but also to be forced to sell some of its prized assets. Recently, a federal judge rejected the U.S. Government's attempt to force Alphabet to sell AdX, a marketplace for online ad space. This isn't the first time Alphabet has emerged from a major antitrust case largely intact.

Now, the company isn't done dealing with legal troubles. It is also facing lawsuits alleging that its social media platform, YouTube, has harmed users. However, Alphabet has navigated its legal problems rather well. And although they remain a risk worth monitoring, given the company's track record, excellent business, and attractive long-term opportunities, the stock remains a strong buy.

Prosper Junior Bakiny has positions in Alphabet and Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, and Tesla. The Motley Fool has a disclosure policy.