Warren Buffett Continues to Load Up on Alphabet, and This 1 Number Is the Big Reason Why

However, in the second quarter of 2025, paid clicks accelerated to a 4% growth rate. It’s a bit difficult to pinpoint the exact catalyst for the growth.

It could be that Alphabet had figured out how to monetize AI Overviews, which it had added to Google Search in 2024. Or it could be that Google’s new AI mode, which gave users a chatbot experience within Search and was introduced that quarter, spurred a wave of usage. Whatever the reason, Buffett purchased Alphabet shares for the first time during the quarter in which paid click reacceleration was reported.

Buffett then increased his Alphabet buying in the first quarter of 2026, as the acceleration appeared to continue. Then, Alphabet’s really strong 13% Q1 2026 paid-click growth, reported during the second quarter, coincided with Berkshire’s biggest Alphabet stock purchase to date.

Why the paid click growth may be so important to Buffett

It’s impossible to say exactly why Buffett invested in Alphabet, but the paid-click reacceleration rate is highly likely to have played a role.

First, Buffett has long lauded the Google Search business. As far back as 2017, Buffett and then-partner Charlie Munger expressed regret at “missing” Google stock. Berkshire’s insurance company, GEICO, was a big user of the platform in Google’s early days, and Buffett and Munger realized GEICO’s bills to Google were growing fast, all at seemingly little incremental cost to Google.

Despite its various other promising high-growth businesses, Alphabet still generates the majority of its profits and cash flow from the core Search business. So, the evidence that business remained intact was likely a big deal to Buffett. Furthermore, Alphabet’s ability to reaccelerate paid clicks also showcases the company’s artificial intelligence research and development chops, since AI and Google Search overlap in technology. So the reacceleration also suggests Alphabet would be a worthy competitor in the AI age.

Finally, the AI races are, at least in part, an arms race. If Search remains profitable and continues to grow quickly, that cash flow can help fund Alphabet’s AI infrastructure build-out. The build-out includes not only cloud data centers but also Alphabet’s in-house-designed semiconductors, Tensor Processing Units (TPUs), which have been shown to perform on par with Nvidia GPUs, without Alphabet having to pay Nvidia’s huge margins.

Alphabet’s massive Search-related cash flow and vertical integration could therefore give it a financial strength and cost-per-token advantage few others can match.

A durable competitive advantage

While Buffett has long said he doesn’t know much about technology, let alone fast-moving AI technology, he does like “durable” competitive advantages. With the Google Search franchise seemingly fending off the competitive onslaught of new AI chatbots, Buffett may not be betting on who wins the AI race but is fine making a bet on an existing, familiar, and highly profitable franchise that may have just proven its longevity.

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Billy Duberstein and/or his clients has positions in Alphabet and Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, and Nvidia. The Motley Fool has a disclosure policy.

Warren Buffett Continues to Load Up on Alphabet, and This 1 Number Is the Big Reason Why was originally published by The Motley Fool