Cue the Bandwagon Investors: Is It Too Late to Follow Warren Buffett Into Alphabet?

I’ve long touted Alphabet (NASDAQ:GOOG) as one of the top Magnificent 7 tech stocks I think is worth buying and holding for the long-term. That thesis still holds true, perhaps more so today than a few months ago. 

Why’s that?

Well, Warren Buffett-led Berkshire Hathaway (NYSE:BRK-B) has stepped into Alphabet in a big way, purchasing around $4.3 billion of GOOG stock last quarter. That stake is now worth considerably more, given Alphabet’s impressive price appreciation after this investment was announced.

It’s also worth noting that Alphabet has a few other key catalysts which appear to be playing into this stock’s most recent surge. Let’s dive into what’s driving Alphabet’s big move, and whether this stock still looks like a buy given its widening valuation premium. 

What this Berkshire Purchase Means for Alphabet

Warren Buffett is still at the helm of Berkshire Hathaway, at least for the next few weeks. He will be ceding control to incoming CEO Greg Abel, who will guide the company forward to its next chapter. Some in the investment community are already considering the real possibility that Abel and his team have had some hand in the company’s pivot toward considering its recent Alphabet purchase, but we’ll have to find out if more in the way of tech investments are coming our way from Berkshire.

To be sure, the market appears to agree that Alphabet looks undervalued relative to its past and future growth prospects. With a leading position in the AI race and plenty to like about a serious cash cow of a search business, Alphabet has one of the most solid balance sheets of any Magnificent 7 company, and also one of the best cash flow growth profiles of its peers.

In that regard, Alphabet certainly does look like one of those top-tier high-quality blue-chip names Buffett would have picked if he were younger. His mantra of buying excellent companies at reasonable prices does shine through here (Alphabet’s valuation is no steal, but it’s attractive on a relative basis). 

Does This Mean Investors Should Follow?

In my view, any stock that Berkshire approves (whether it’s Buffett or his team, and this pick looks like it’s got all the signs it wasn’t Buffett) is a stock worth considering.

That said, I think even without this key tailwind at Alphabet’s back, most investors could make a strong fundamental argument to own this stock. The company’s most recent results have shown blowout revenue and earnings, driven by very strong performance across her omapny’s core search, YouTube and Google Cloud businesses. As AI products increasingly drive Alphabet’s cloud demand and backlog, investors are probably going to be correct in assuming that this is a stock with much greater growth potential as it scales this side of its business. 

And while Alphabet has signaled to investors that the next super-cycle in capital spending will be coming, market participants don’t appear to be broadly concerned with the impacts of this spending on Alphabet’s bottom line. That’s because the company’s deep pockets and ability to generate incredible cash flows from its core business remains.

The Key Reason I Think Alphabet Could Soar in 2026

My overarching bullish thesis around Alphabet has shifted from one which really focused on the company’s core cash flow generating businesses (though I still think that’s an integral part of the investing thesis) to one which is more centered around AI.

Alphabet’s Tensor processing units are home-grown chips the company has used to scale its AI endeavors. These chips are much more cost effective than the larger and more powerful GPUs provided by Nvidia (NASDAQ:NVDA) and others, allowing Alphabet to do more with less.

Now, analysts are projecting Alphabet could be a key winner in the chip race as well, with hundreds of billions of dollars in orders likely to come as companies (the real end consumer for these chips) looking for the absolute best “tokens-per-dollar” metric in this space. 

Overall, there’s really not a lot that investors can look at with Alphabet and think this is a company that has serious downside risk. Of course, in a recession, no stock is safe. But of the truly high-growth names dominating the S&P 500 right now, Alphabet is a top pick of mine. Whether you call yourself a bandwagon investor or not, won’t matter at the end of the day. It’s all about generating alpha, and that’s what the Berkshire team appears intent on doing right now.