Greg Abel, Warren Buffett’s successor, has significantly increased Berkshire’s investment in this “Magnificent Seven” stock. Should you consider buying it?

May 18, 2026

Berkshire Hathaway, under new CEO Greg Abel, recently submitted its first quarterly 13-F report, and one decision really captured attention. In just three months at the helm, Mr. Abel upped Berkshire’s investment in Alphabet by a significant 224%, boosting the total to around 58 million shares, which are valued at about $23 billion. This positions Alphabet’s parent company as one of Berkshire’s top seven holdings.

When Warren Buffett founded the company in Q3 2025, his investment was relatively small. However, Mr. Abel’s expansion of this stake—since he officially took over as CEO on January 1, 2026—signals a strong vote of confidence in Alphabet.

After this endorsement and Alphabet’s recent surge in stock price, the question arises: is Alphabet still a wise investment?

Why Stakes Matter

Alphabet is performing excellently. Its first-quarter sales surged by 22%, or 19% in constant currency, reaching $109.9 billion. This reflects a marked acceleration from previous quarters—18% growth in Q4 2025 and 16% in Q3 2025—making it the fastest growth rate for the company in over two years. Notably, this is Alphabet’s 11th consecutive quarter of double-digit growth.

Moreover, the operating profit for the first quarter rose by 30%, now sitting at $39.7 billion, with the operating margin increasing by 2 percentage points to 36.1%.

Alphabet’s cloud segment remains a driving force. Revenue from this sector jumped 63% to $20 billion, a significant increase from 48% growth in Q4 2025 and 34% in Q3 2025. The cloud’s operating margin nearly doubled to 32.9%, and operating income tripled to $6.6 billion. Additionally, its backlog—a crucial indicator of expected future revenue—almost reached $462 billion within three months.

Alphabet CEO Sundar Pichai remarked that enterprise AI solutions are now key growth drivers in the cloud, with revenue from AI products soaring nearly 800% year over year in Q1.

On the advertising side, Alphabet seems stable. Search and other ad revenues increased by 19%, totaling $60.4 billion, with YouTube ads also growing by 11%. Notably, paid subscribers across YouTube, Google One, and Gemini reached 350 million.

But there are risks that shouldn’t be overlooked.

Capital expenditures reached $35.7 billion in the first quarter, while management has raised the full-year capex outlook for 2026 to between $180 billion and $190 billion. Chief Financial Officer Anat Ashkenazi stressed this increase compared to 2026. Such expenditures could impact free cash flow, so if AI demand diminishes, there’s little room for error.

But Is the Stock Still Worth Buying?

New investors might find it a challenge because Alphabet stock isn’t trading at the lower prices seen when Berkshire first invested last fall. At the end of Q3 2025, Berkshire’s position was valued around $243 per share, whereas it’s currently hovering around $393—a 25% increase since the year began.

That being said, the valuation still appears reasonable for a fast-growing company. Alphabet’s price-to-earnings ratio is about 30, which is only slightly above its five-year average of 24. Given the rising revenue growth, expanding margins, and a cloud business that could significantly increase revenue over time, this valuation might be justified.

It’s worth considering that Buffett and Abel typically look for a considerable margin of safety when beginning a position in a stock. The choice to significantly increase their stake in Alphabet suggests that they see considerable long-term potential in the company at this price point.

However, it’s not exactly a bargain. Quick returns might already be factored in, and the increased capital expenditures could put pressure on free cash flow soon. Still, for those yet to invest in this tech and AI leader, starting small at the current price might be advisable, as there’s potential for meaningful gains ahead.

Should You Buy Alphabet Stock Now?

Before deciding to buy Alphabet stock, consider the following:

Our analyst team has identified other stock opportunities that might offer impressive returns in the coming years, and Alphabet isn’t one of them.

Lastly, consider that the stocks highlighted by analysts have shown remarkable performance, so it may be wise to explore them as potential investments.