Warren Buffett Bought This New Dow Jones Stock Last Year and His Successor Recently Increased the Position by 200%. Is It Still a Buy?

Warren Buffett’s (via Berkshire) latest tech bet—Alphabet—receives a bullish read as Greg Abel increased the position by ~200% in Q1. Alphabet is trading around 24x forward earnings (vs. <20x at Buffett’s initial entry), while AI is cited as a growth driver: Google Cloud revenue rose >60% and backlog nearly doubled to ~$460B, supported by record-high AI-driven search queries. Overall, the article argues Alphabet’s moat (Google search holding >90%) and “reasonable” valuation keep it attractive for long-term investors.

Analysis

Buffett’s involvement matters mostly as a signaling event: it can shrink the valuation discount on large-cap AI beneficiaries that combine growth with cash generation, but it does not change the underlying search/ads economics. The near-term winner is GOOG/GOOGL because the market can underwrite it as a durable compounder rather than a disrupted ad business, which supports the multiple if earnings stay stable. The bigger second-order effect is on capital allocation expectations: if management keeps buybacks aggressive while AI capex rises, per-share EPS can keep compounding even if headline revenue growth moderates.

The competitive read-through is that the real battle is not AI vs search, but who captures intent monetization as users shift from links to answers. If Google’s AI surfaces increase queries, that favors the ad auction stack and pressures smaller search-ad intermediaries; if they do not, MSFT/OpenAI keeps the narrative edge and Google becomes a capex-heavy defender. Cloud backlog is the more important medium-term catalyst than the Buffett headline: backlog conversion can support a re-rate only if margins hold, because investors will punish any sign that inference costs are outrunning monetization.

Contrarian view: consensus may be overweighting the social-proof angle and underweighting that this is no longer a deep-value setup. The stock likely works if search share stays intact and cloud growth converts over the next 1-3 quarters; it breaks if guidance shows capex rising faster than revenue or if query/ads growth normalizes. Immediate support is sentiment-driven over days, but the real test is the next earnings cycle, with the structural debate playing out over 6-18 months.

Key Decisions for Investors

• Accumulate GOOG/GOOGL on 2-3% pullbacks over the next 1-2 weeks; use a 1-3 month horizon into earnings. Risk/reward is attractive if search revenue and cloud margin commentary stay firm, but fade the trade if capex guidance steps up faster than revenue.
• Express the view as long GOOGL / short QQQ for 3-6 months to isolate relative-quality re-rating versus the index. This is a cleaner way to capture multiple support without taking full market beta.
• If already long, consider selling near-dated covered calls against GOOG/GOOGL to monetize the sentiment pop. The Buffett premium is likely short-lived unless the next quarter validates cloud backlog conversion.
• Watch MSFT and META as competitive tell-tales over the next earnings cycle. A continued hold in search and ads share at Google would strengthen the long thesis; any sign of share loss would be the fastest falsifier.