If I Were Starting Over With $500 to Invest, I'd Begin by Building a Portfolio Around This Unstoppable Stock

Like most investors, I stepped into the stock market rather cautiously, doing my best to follow Warren Buffett's primary rule: "Don't lose money."

Three decades later, I now realize I didn't fully appreciate the nuances of this tip. Namely, I conflated temporary setbacks with locking in losses. Oh, I knew the difference between realized and unrealized. It's just that, mentally, I convinced myself that some pullbacks never stop. Big mistake. Most do. This mindset kept me out of some stocks that would have ended up being very big winners.

I can't go back in time and do things over. I can, however, help others learn from my mistakes and tell them the very first stock I would have bought and held back then if I had known then what I know now. That's Google parent Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG).

Image source: Getty Images.

Alphabet has been unstoppable

OK, Google wasn't around when I first started investing. It wouldn't exist until 1998, and it didn't go public until 2004. If I were just starting out or starting over again today, however, it would be the foundational position in my portfolio.

That surprises a few people. It's a volatile technology stock, after all, and hot tech stocks come and go, replaced by the next great ones.

Except, that's clearly not been the case here. Over the past 28 years, Alphabet's Google has become the primary gatekeeper of the World Wide Web. Over 90% of the planet's web search queries are made using Google, according to numbers from Statcounter, while Google's operating system Android is installed on nearly 70% of the world's mobile devices. Gmail remains the most-used free email service with (company-reported) 3 billion users, and within the United States, YouTube garners more total watch-time than Netflix and all of Disney's streaming services combined. And the use of all of these platforms is a self-enforcing habit that would be tough to break now. Alphabet simply needs to optimize how it monetizes all of this traffic.

And it's gotten very good at doing exactly that. Except for the second quarter of 2020, when the COVID-19 pandemic was rattling the world, not one quarter since 2012 has seen this company fail to produce year-over-year revenue growth. Profit growth has been almost as reliable.

Data by YCharts.

Q2 results reaction was just another predictable pullback

Sure, the stock's down following Wednesday evening's release of its second-quarter results. Investors are worried about the additional money it's planning to spend on artificial intelligence for the remainder of 2026. Alphabet was budgeting between $180 billion and $190 billion in capital expenditures this year, but has upped this forecast to a range of $195 billion to $205 billion.

This is one of those temporary -- and even predictable -- setbacks I was talking about, though. Just take a step back and look at the bigger picture. Alphabet is one of the few companies getting a clear, sizable return on its AI investments. Last quarter's cloud computing business grew by more than 80%, more than tripling this segment's operating income.

More than anything, however, it's just difficult to envision a time when Google isn't symbiotically synonymous with the World Wide Web itself. And the internet certainly isn't going away anytime soon.

James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Netflix, and Walt Disney. The Motley Fool has a disclosure policy.