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Lee opened the discussion by recalling a recent moment when I told listeners that Alphabet was my top tech pick. The timing turned out to be interesting. Shortly after, Berkshire Hathaway disclosed a 2.4 billion dollar purchase of Alphabet stock, a move that put Warren Buffett’s endorsement behind the same logic we laid out: Alphabet is not just a dominant advertising platform, but a multifaceted AI and chip company with cash flow that can fund long-cycle innovation.
The Cash Engines That Fund Everything
I explained to Lee that what makes Alphabet unique is the stability of its core businesses. Search remains the global leader by an overwhelming margin, and YouTube continues to dominate online video. These businesses form a moat that is almost impossible for competitors to penetrate. They generate the cash required to support Alphabet’s AI ambitions without relying on external capital or heavy borrowing.
Lee pointed out that product stickiness is central to this advantage. Chrome users are deeply embedded across personal and professional workflows. Gmail, Maps, and the broader suite of Google services create a gravitational pull that keeps users inside the ecosystem for years. Switching away is not just inconvenient. For many, it is unthinkable.
AI and Chips Add New Dimensions
As soon as we reviewed the recent developments, the picture became even clearer. Alphabet now has an AI model that early reviewers believe can hold its own against OpenAI’s latest generation. The company also builds its own advanced chips, which are beginning to draw comparisons to Nvidia’s offerings. This combination of hardware capability, cloud infrastructure, and consumer distribution puts Alphabet in a category few competitors can match.
I told Lee that Alphabet today resembles a gambler who visits every table in the casino and leaves with winnings from all of them. What makes the analogy more fitting is that Alphabet effectively owns the building. If investors want exposure to AI without the balance-sheet risk facing more leveraged players, Alphabet provides a rare blend of durability and upside.
Holding the House Advantage
Lee added that owning Alphabet is like owning the house in a casino, and I agreed. The company enjoys both scale and staying power across multiple tech cycles. Even as AI reshapes industry economics, Alphabet’s starting point is uniquely strong. It controls the distribution, the data, the user relationships, the infrastructure, and increasingly, the chips and models themselves.
We ended by noting that Buffett’s timing may have validated the thesis, but the underlying reasons were already visible. Alphabet’s moat is not only intact, it is widening as AI accelerates.
Transcript:
[00:00:00] Lee Jackson: You know, Doug, about a month or six weeks ago when we were doing a podcast, you came on and you basically said, I have one huge favorite tech stock. And I was like, all right, let’s let everybody know. And much to my chagrin, it wasn’t a, you know, it wasn’t an Nvidia, it wasn’t Broadcom, wasn’t that. It was our old friend Alphabet and the owner of Google.
[00:00:24] Lee Jackson: And right after you announced that, I guess you’ve been talking to people in Omaha. Warren Buffet announced that they had bought $2.4 billion worth of, you know, Google. So what’s the reason it’s the top stock on Wall Street now?
[00:00:42] Doug McIntyre: Well, I want people to know, right, that, I go to the same McDonald’s that Buffet goes to.
[00:00:48] Doug McIntyre: Okay? No. Each other almost every morning, and then, okay, we, us, we usually go to the Piggly Wiggly nearby and get a Cherry Coke at lunch. Okay. we’ve got that. This is what I love about alphabet. Alphabet is in the chip business. People don’t realize that, but they just figured it out. Yes, they are. They’re in the AI business, they’re in the cloud business.
[00:01:10] Doug McIntyre: But what I want in a company is I want some core businesses that fund everything.
[00:01:16] Lee Jackson: That’s right. Businesses have
[00:01:17] Doug McIntyre: been, I want businesses that have been around forever. I want businesses that are number one, it’s the old Jack Welsh. I don’t wanna own anything unless it’s number one or number two in its industry.
[00:01:29] Doug McIntyre: Google, in terms of search advertising, is number one by 5 million miles, and YouTube is number one in terms of video streaming by 950 billion miles. Those things have such a huge moat as they like to say at business schools that it’s not funny. You cannot compete with Google, you cannot compete with YouTube.
[00:01:53] Doug McIntyre: They are massive cash cows. So if you’re looking at companies that are in the ai business that don’t have to, you know, scour around for huge amounts of money off their balance sheets, I love Alphabet and, and there’s good reason to think that, AI powered search is not gonna take a lot of share away from Google because Google is a habit.
[00:02:14] Doug McIntyre: Okay? It’s, it’s, it’s not just a product, it’s a habit. It’s like Kleenex, okay? When I go to the drug store, they’re all sorts of tissues everywhere. I buy the Kleenex ’cause I, I know it’s good.
[00:02:28] Lee Jackson: Yeah.
[00:02:29] Doug McIntyre: So, so to me they’re generally
[00:02:30] Lee Jackson: softer and hold up a little bit better. Absolutely.
[00:02:33] Doug McIntyre: And look, they’ve got Chrome, so they’re, they’re a dominant player, in the browser business.
[00:02:38] Doug McIntyre: They own everybody’s email box. Right. They know own everybody’s maps. Nobody goes any place without you using Google Maps. Nope. And, and other thanApple, to me it is the stickiest company in the United States, which means if you use them, the odds you’ll continue. How many people own an iPhone and decide they’re gonna go, go buy an Android from Samsung?
[00:03:01] Lee Jackson: Well, and now that you mention that, I saw for the first time in 15 years, Apple (NASDAQ: AAPL) passed shipments of, of Samsung and Android. So, yeah, which proves your point. I mean, people are, will, will stick there pretty hard. And, and it’s like you said with, with, with a a, a product like Chrome, all of my stuff, like my personal stuff is tied into that.
[00:03:23] Lee Jackson: Sure. And for me to switch to another, I mean, the only other, I guess I could use Yahoo, I guess, but I mean, I’m not moving all my stuff there. I, I write on it. You, you probably write on it. You know, we we’re so tied into it that it’s not going anywhere.
[00:03:40] Doug McIntyre: Are you gonna change from Gmail if you have a Gmail account?
[00:03:43] Doug McIntyre: No, of course. Of course not. Of course not.
[00:03:45] Lee Jackson: Everybody has it.
[00:03:46] Doug McIntyre: I understand. But I’m not gonna migrate, I’m not gonna become [email protected]. Yeah. Or Comcast or MSN or whatever. Yeah. That’s not gonna happen. So the stickiness of the Alphabet products to me is one of the reasons that the, that company will do very well forever.
[00:04:06] Doug McIntyre: They now have an AI product which people think is comparable to open ais. Yeah. And they have chips now that people are starting to think are as good as NVIDIA’s chips. Yeah. So look at, they’re like a guy who went into a casino and they went from table to table to table game to, and won everything. Just, and then, and then went up to the window.
[00:04:28] Lee Jackson: It, it’s sort of like that and the window. And that’s a difficult thing to do because they don’t build those big casinos in Vegas ’cause the house loses. So, you know, if, if you own Google, you essentially own the house or you own Alphabet, you own the house in that rack.
[00:04:43] Doug McIntyre: I love that. And I hope that people who are listening will coin that.
[00:04:46] Doug McIntyre: Owning Alphabet is owning the house, or it is actually being the house.
[00:04:51] Lee Jackson: Yeah. Well, it’s, it’s, it’s part and parcel of both, to be honest with you. But I, you know, hats off to you and to Warren Buffet, you know, for picking the stock at about the same time. But I, you beat him to the punch and he must have heard, so now he’s got a big chunk as he leaves the broom.
[00:05:09] Doug McIntyre: Well, listen, I’m seeing him Friday at the Piggly Wiggly to get a, a Cherry Coke. So I’ll, I’ll send him, I’ll send him your best. Well, thanks a lot.