Warren Buffett and Greg Abel Have Been Loading Up on This Top Artificial Intelligence (AI) Stock That’s Trading at a Bargain-Basement Price
Jennifer Saibil, The Motley Fool
Tue, July 28, 2026 at 4:35 PM GMT+5:30
4 min read
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Warren Buffett delighted the market when Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) announced a new stake in Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) in the 2025 third quarter, and Greg Abel added to the position when he tripled it in the 2026 first quarter, his first as chief executive officer. Alphabet represents 7.8% of Berkshire’s equity portfolio, making it one of the largest positions
Although Alphabet reported fantastic growth in the 2026 second quarter, the stock plunged after the earnings report last week. The market was not pleased with management’s plans to devote as much as $205 billion to capital expenditures for the full year, which already sent free cash flow into negative territory in the first quarter for the first time in more than a decade
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But as the stock falls, it’s trading at a bargain-basement price. Here’s why it looks like a great deal rather than a value trap
Stepping it up for AI
Hyperscalers like Alphabet continue to view artificial intelligence (AI) as a huge opportunity, and they’re spending to capitalize on it and keep up with the competition.JPMorgan Chase CEO Jamie Dimon thinks totaL spending is going to reach $700 billion this year, up from $400 billion last year, and Alphabet is spearheading the charge with its investments
The second-quarter results were outstanding, and they demonstrated an acceleration from first-quarter results. Revenue increased 24% year over year, with growth across the company. The standout, though, was in the cloud business, where the AI magic happens. Cloud revenue increased 82% year over year, and Alphabet may have made progress in closing the gap with Amazon (NASDAQ: AMZN) Web Services and Microsoft, which are both ahead of it in global market share
“Our AI investments are redefining what’s possible across every part of our business,” CEO Sundar Pichai said. The company is experiencing rapid growth in the AI business, and it’s happening everywhere across the enterprise, from search users going deeper with AI mode to 90% of Fortune 100 clients engaging with Gemini Enterprise
More than 9 million developers are creating apps with Gemini large-language models, and the latest Gemma open model has been downloaded 300 million times since going live in April. The Gemini app now has more than 950 million monthly active users
