Warren Buffett previously expressed regret over not investing in Google during its early years despite recognizing its potential. Buffett, known for avoiding tech stocks and IPOs due to their volatility and overvaluation, finally invested in Alphabet (Google’s parent company) in late 2022. At the time, Buffett acknowledged having missed a 9,000% gain by delaying his decision.
Since then, Buffett and Berkshire Hathaway’s CEO Greg Abel have invested billions into Alphabet, positioning it among Berkshire’s significant holdings. Buffett’s late investment highlights a shift in his view, now considering Alphabet’s aggressive capital investments and strategic growth plans—such as building new data centers and advancing AI technology—as valuable opportunities.
Buffett values businesses that generate returns significantly above the risk-free rate. Alphabet’s extensive capital expenditures, projected to be around $200 billion, suggest strong long-term investment potential. The company’s focus on profitability through its core digital advertising business and cloud services appears promising, especially given its effective long-term contracts providing visibility and stability.
As Alphabet’s stock remains reasonably priced in relation to its projected earnings, it’s likely that Buffett and Abel will continue their investment strategy in the upcoming quarter.
