2 Reasons to Buy Warren Buffett’s Favorite Artificial Intelligence (AI) Stock and Never Sell

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When Berkshire Hathaway reports its quarterly holdings, investment watchers often search for new entries and exits. Over the last year, one position has steadily climbed the portfolio ranks: Alphabet Inc. (NASDAQ: GOOGL) (NASDAQ: GOOG). While Warren Buffett rarely discusses technology picks with the same enthusiasm he reserves for Coca-Cola or American Express, the growing stake suggests the Google parent has become the Oracle of Omaha’s favorite artificial intelligence play. The question for everyday investors is simple — should they treat Alphabet as a trade or as a permanent holding? Here are two reasons the latter might be the smarter move.

1. Alphabet’s AI advantage is embedded inside products billions already use

Pure-play AI startups burn cash building a user base from scratch. Alphabet does the opposite. Its AI research, including the Transformer architecture that underpins modern large language models, flows directly into Google Search, YouTube, Google Cloud, and Android — ecosystems that already serve over four billion users. This turns every improvement in AI into an instant revenue opportunity rather than a speculative lab project.

Consider Google Cloud: enterprise customers adopt Vertex AI and custom machine learning tools without switching productivity suites. Advertisers receive AI-generated campaign suggestions inside Google Ads, where real-time bidding already relies on deep learning. On YouTube, automated dubbing and content recommendations boost watch time and ad inventory. These integrations mean Alphabet does not need to convince the world to try a new AI platform — it simply upgrades the platforms the world already depends on.

Moreover, Alphabet’s own data centers and custom-designed tensor processing units (TPUs) give it a cost advantage that smaller rivals cannot match. The combination of proprietary infrastructure, decades of user-behavior data, and a business model already designed to monetize attention makes Alphabet’s AI moat unusually durable.

2. A valuation that rewards patience instead of momentum

Many AI-linked mega-caps soared in 2023 and 2024, pushing their earnings multiples into historically expensive territory. Alphabet, despite being a clear AI leader, has often traded at a discount. Even after recent gains, its forward price-to-earnings ratio tends to sit below peers that lack Alphabet’s diversification. For a company expected to grow free cash flow at a double-digit pace, this relative cheapness can act as a safety net for long-term investors.

Berkshire Hathaway’s discipline reinforces this point. Buffett has famously preferred businesses with strong moats, predictable earnings, and the ability to repurchase shares at attractive prices. Alphabet fits all three criteria. Over the trailing twelve months, it generated more than $69 billion in free cash flow and repurchased over $60 billion of its own stock, according to data from Alphabet’s investor relations page. That buyback firepower not only supports the stock during market dips but also signals that management views shares as undervalued.

A lower multiple combined with aggressive buybacks creates a straightforward compounding engine. If Alphabet’s AI investments merely sustain its current competitive position, the stock still offers a margin of safety that hot AI names lack. If those investments accelerate cloud adoption or unlock new advertising formats on YouTube, the upside is a bonus. Either way, the valuation math favors holding through cycles — exactly the kind of setup that turns a quarterly filing into a “never sell” conviction.

It is important to distinguish between Berkshire Hathaway’s portfolio activity and a public endorsement from Buffett himself. The conglomerate’s investment managers, Todd Combs and Ted Weschler, execute most equity trades, and Berkshire has never issued a press release calling Alphabet its favorite AI stock. Still, the sheer size and consistency of the holding — now among the top positions — speak louder than any sound bite. When one of history’s most patient capital allocators keeps adding to a company that can convert groundbreaking AI research into real-world profits, the message is clear: this is a business built to own, not to flip.

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