Here's Why July 22 Could Be a Big Day for Warren Buffett's Successor, Greg Abel

Warren Buffett served as the CEO of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) from 1965 to 2025, growing it into a $1 trillion conglomerate with numerous wholly owned subsidiaries and a portfolio of stocks and securities that is today worth about $347 billion. Buffett continues to serve as Berkshire's chairman, but his chosen successor, Greg Abel, took over as CEO at the beginning of 2026.

Berkshire Hathaway stock delivered compound annual growth of 19.7% during Buffett's 60-year tenure, which would have been enough to turn a $500 investment made in 1965 into a staggering $24 million as of the end of 2025. Therefore, Abel has very big shoes to fill, and it appears he's already swinging for the fences.

Berkshire purchased shares of Google parent Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) last year, but it has quadrupled its position since Abel took the helm. The stake is now worth over $30 billion and accounts for almost 9% of the conglomerate's equity portfolio. Alphabet is scheduled to report its operating results for the second quarter on July 22, and that earnings release will be a key test of Berkshire's biggest bet under Abel so far.

Image source: Alphabet.

Berkshire will be looking for more AI-driven momentum at Google Search

AI was initially expected to be a massive disruption to Alphabet because chatbots like OpenAI's ChatGPT can be a more convenient way for people to find information online compared to traditional search engines like Google Search. But Alphabet has invested heavily in new AI-powered features like AI Overviews and AI Mode to create a hybrid user experience, and it's paying off.

AI Overviews combine text, images, and links to third-party sources to give users fast responses to their Google Search queries. These answers appear above the traditional search results, so users don't have to sift through web pages to find the information they need. AI Mode, on the other hand, opens a chatbot-style interface where users can expand on their initial queries by asking follow-up questions.

Alphabet said AI Overviews fueled growth in overall Google Search usage during the first quarter of 2026, and it also said a growing number of users globally are tapping into AI Mode. This is critical because when Google Search receives more traffic, it can serve more ads and generate more revenue.

The benefits are already showing up in Alphabet's financial results. Google Search generated a record $60.4 billion in revenue during the first quarter, which was a 19% increase from the year-ago period. It was also the fourth consecutive quarter of accelerating growth, and shareholders like Berkshire will be looking for evidence of further momentum in Alphabet's second-quarter report.

Google Cloud likely had another record quarter

While Google Search consistently accounts for more than half of Alphabet's total revenue, Google Cloud is the company's fastest-growing segment. Its revenue soared 63% year over year in the first quarter to $20 billion. Most of that growth can be attributed to Google Cloud's expanding portfolio of AI tools and services.

The cloud computing infrastructure provider operates data centers all over the world that are fitted with advanced chips and components specifically designed for processing AI workloads. Some of those chips come from suppliers like Nvidia, but Alphabet has also designed its own AI chips in partnership with Broadcom. They are called Tensor Processing Units (TPUs), and the latest versions -- the eighth generation of the chips -- are the most powerful yet.

Google Cloud rents computing capacity from its data centers to other businesses, many of which use it to develop and power AI software. Clients can also access a series of ready-made large language models (LLMs) through the cloud platform, including Alphabet's own Gemini family, which they can use to accelerate their software development goals.

All eyes will be on Google Cloud's second-quarter revenue growth on July 22, but there's another key number investors would be well advised to watch. The platform's order backlog nearly doubled sequentially to $462 billion during the first quarter, driven by customers who were waiting for more data center capacity to come online. If that figure continued to soar in Q2, Wall Street might have to start pricing in even faster future cloud revenue growth, which would be positive for Alphabet stock.

Alphabet stock looks cheap

Berkshire owned 17.8 million Alphabet shares at the end of 2025. Under Abel's leadership, the conglomerate has more than quadrupled its position to around 86.4 million shares. Alphabet is now the fifth-largest position in Berkshire's portfolio, just behind Bank of America.

Alphabet stock has set multiple new all-time highs this year, so Berkshire has been buying on the way up. That might surprise people who followed Buffett's career, because he is a value investor who preferred to buy stocks when they were beaten down, or at least trading below what he considered to be a fair price.

However, despite the recent gains in Alphabet stock, it isn't necessarily expensive. It's currently trading at a price-to-earnings (P/E) ratio of 27.3, so it's still cheaper than the Nasdaq-100 technology index, which has a P/E ratio of 35.2. Plus, based on Wall Street's earnings estimate for 2027, Alphabet's 1-year forward P/E is just 24.6.

GOOGL PE Ratio data by YCharts.

One quarterly report is unlikely to derail Alphabet's positive momentum, but there is no denying that the company's financial performance will likely depend on the success of its AI initiatives. As a result, investors might be watching its second-quarter results more closely than usual, given how high the stakes are for this early-stage technology.

July 22 could be an important day for Abel as Berkshire's shareholders gauge the success of his first big swing. However, I expect each of Alphabet's quarterly reports going forward will be equally critical for the new CEO, given the size of this position.

Bank of America is an advertising partner of Motley Fool Money. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, Broadcom, and Nvidia. The Motley Fool has a disclosure policy.