3 Reasons to Buy Warren Buffett's Favorite Artificial Intelligence (AI) Stock And Never Sell

Warren Buffett retired as Berkshire Hathaway's CEO at the end of last year, but he swung at one more fat pitch before stepping down. In late 2025, Berkshire started a large position in Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) -- and it's still buying. Berkshire's new CEO, Greg Abel, recently struck a deal to buy an additional $10 billion in shares in a private offering, bringing Berkshire's investment to over $30 billion at current share prices.

Here are three reasons to buy Warren Buffett's top AI pick and hold for a lifetime.

Image source: The Motley Fool.

1. Alphabet has digital advertising dominance

Alphabet's Google is in a strong competitive position, serving as the gateway to the internet. In 2025, advertising revenue comprised over 70% of the company's total revenue. Alphabet currently has seven products and platforms that each serve at least 2 billion monthly active users, including Search, YouTube, Gmail, Android, and Maps.

High-margin revenue from advertising and subscriptions, including 350 million paid users across Google One and YouTube Premium, pads the bottom line. Alphabet generated $160 billion in trailing-12-month net income as of March 31 on $423 billion of revenue.

Google's dominance in online advertising and the high margins it earns on this growing revenue help explain why Warren Buffett loves this business.

2. Alphabet is demonstrating AI leadership

But the real advantage of Google is not in advertising. It's data and how that data improves Gemini -- the AI powering all the company's products. Billions of interactions, including what people search for and what responses users find most helpful, continuously improve Gemini and lead to more relevant recommendations and answers for users.

Gemini's development also helps drive demand for enterprise AI tools in Google Cloud. This is Alphabet's fastest-growing business, with cloud revenue up 63% year over year in the first quarter and now accounting for 18% of the company's revenue.

What Alphabet has built here is an impenetrable competitive moat. It's got billions of users who attract advertisers, generating huge profits. This ultimately drives the company's investment in technology, AI models, data centers, and chips. Google is basically a giant AI factory that converts data into cash.

3. Alphabet is showing financial strength and valuation

As new AI features have enhanced products like Search, the company's revenue growth has improved. In the first quarter of 2026, total revenue grew 22% year over year, compared to 12% in Q1 2025 and 15% in Q1 2024.

While Alphabet must continue to spend capital aggressively to maintain its lead in AI, investments in chips and data centers have a multiyear useful life. This lays the foundation for higher returns as revenue growth leverages these upfront costs over time.

Given its wide moat and financial strength, the stock remains a solid investment opportunity. The shares trade at a forward earnings multiple of 26. Obviously, the recent deal to acquire another block of shares means that Abel and likely Buffett still see the stock as offering excellent value for investors.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy.