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Buffett's $4 B Bet: Is Alphabet Still a Bargain?
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Published in Stocks and Investing on Sunday, November 23rd 2025 at 21:23 GMT by The Motley Fool- 🞛 This publication is a summary or evaluation of another publication
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Should You Buy Alphabet Stock After Warren Buffett’s New $4 B Bet?
An in‑depth look at the implications of Berkshire Hathaway’s latest investment in Google’s parent company
When Warren Buffett’s Berkshire Hathaway announced that it had placed a fresh $4 billion bet on Alphabet Inc., the world of investing felt a sudden jolt. The announcement—published on the Berkshire website and subsequently picked up by major outlets such as CNBC, Reuters and, of course, MSN Money—prompted a flurry of questions: What does Buffett’s confidence mean for Alphabet’s stock price? Is the valuation still attractive or has the company simply reached a ceiling? And, perhaps most importantly, should retail investors act on this signal or wait for more data?
Below, we distill the key take‑aways from the MSN Money story and the web of links it follows, so you can decide whether to add Alphabet to your portfolio or to stay on the sidelines.
1. Buffett’s Track Record—Why a $4 B Bet Matters
Warren Buffett is revered for his disciplined, long‑term value‑investment philosophy. Over the last 30 years, his portfolio has included Apple, Coca‑Cola, and even a recent $20 billion stake in Bank of America, all of which were purchases based on solid fundamentals and durable competitive moats.
The article points out that Buffett’s new stake is the largest single purchase Berkshire has made in Alphabet in over a decade. It links to the original Berkshire earnings release (where the bet was disclosed) and to a CNBC piece that highlights Buffett’s “never‑quit” attitude towards growth businesses that are still undervalued. For many investors, a Buffett endorsement is tantamount to a “seal of approval,” implying that the company is fundamentally sound and poised for long‑term growth.
2. Alphabet’s Fundamentals: Revenue, Profit, and Growth Drivers
Alphabet’s financials, as described in the article, are a blend of advertising dominance and diversification into high‑growth sectors:
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $282 billion | $257 billion |
| Net Income | $59 billion | $49 billion |
| Year‑over‑Year Revenue Growth | 10.8 % | 13.3 % |
Alphabet is still the undisputed king of search and digital advertising, but its cloud business (Google Cloud) and YouTube advertising are accelerating faster than its legacy advertising segments. The story also references a recent SEC filing (link) that underscores Alphabet’s AI investments—particularly the generative‑AI capabilities that are expected to drive both cloud adoption and product innovation.
Why this matters: Buffett has repeatedly said that he looks for companies with a “wide moat.” Alphabet’s moat has two sides: the “network” moat of the Google ecosystem (search, Android, YouTube) and the “intellectual‑property” moat of its AI research and patents. The article argues that this combination could justify a premium valuation, especially if AI continues to be a revenue driver.
3. Valuation—Is the Stock Still Cheap?
One of the article’s main points is that, despite Buffett’s buy, Alphabet’s valuation still feels high to some analysts. Key metrics referenced include:
- Trailing P/E: 27×
- Forward P/E (latest 12‑month forecast): 23×
- PEG Ratio: 1.8×
The article compares these figures to the historical range of Alphabet’s valuation and to peers like Meta (Facebook) and Microsoft. While the trailing P/E is close to the mid‑20th‑century average for technology giants, the forward P/E reflects expectations of continued growth.
A link to a Bloomberg chart illustrates Alphabet’s valuation trajectory since the announcement. It shows a modest 4–5 % jump in the stock price immediately after the news—a typical market reaction—but also a gradual re‑calibration as analysts digest the long‑term implications of AI and regulatory changes.
4. Risks and Headwinds
No investment is without downside. The MSN piece flags several concerns:
| Risk | Explanation |
|---|---|
| Antitrust scrutiny | The U.S. Federal Trade Commission (FTC) and the European Union are actively investigating Google’s dominance in search, advertising, and Android. Potential fines could erode margins. |
| Regulation of AI | As Alphabet’s AI offerings expand, governments are already drafting data‑privacy and AI‑ethics rules that could impose new compliance costs. |
| Competitive pressure | Amazon Web Services (AWS) and Microsoft Azure are rapidly catching up in the cloud arena; Meta’s “Metaverse” could reshape digital advertising. |
| Macroeconomic slowdown | Advertising spending is cyclical and could contract if global growth falters. |
The article references a Reuters interview with an antitrust lawyer and a link to Alphabet’s own Q1 2025 earnings call, where executives discuss compliance plans. This context reminds investors that even a Buffett‑backed stock is subject to market, regulatory, and operational risks.
5. What Might Buffett Be Thinking?
The article speculates on Buffett’s possible rationale behind the purchase:
- Undervalued Intrinsic Value – Buffett’s own valuation models suggest Alphabet’s intrinsic value might be 20–30 % higher than its current market price, especially when factoring in future AI revenue.
- Long‑Term Growth – AI and cloud are seen as “catalysts” that will drive both higher top‑line and margin expansion, aligning with Buffett’s preference for durable growth engines.
- Strategic Timing – Buffett is known to buy in “good markets” when the economy is poised for recovery; he may believe that the post‑pandemic shift to digital will continue to benefit Google.
The article links to a 2023 interview with Buffett in which he discusses his criteria for “quality businesses,” emphasizing a solid balance sheet, a strong management team, and a history of free‑cash‑flow generation. Alphabet ticked all those boxes, according to the piece.
6. Bottom Line: Should You Buy Alphabet Now?
The MSN article concludes that the decision hinges on two factors:
- Investment Horizon – If you’re a long‑term holder, Buffett’s endorsement may reinforce confidence that Alphabet will continue to deliver value over the next decade.
- Risk Appetite – If you’re uncomfortable with high valuations and the uncertainties of AI regulation, you might wait for a price dip or consider a more diversified tech ETF instead.
Practical Take‑aways:
- Monitor Valuation: Keep an eye on Alphabet’s forward P/E and compare it to the 2023 forecast; if it drifts toward the historical average, it may be a good entry point.
- Track AI Milestones: Follow Alphabet’s quarterly AI revenue reports (linked in the article) for signs of growth acceleration.
- Watch Regulatory Developments: Stay informed about FTC and EU investigations that could materially affect Alphabet’s cost structure.
In short, Buffett’s $4 billion bet signals confidence, but it does not eliminate the need for due diligence. As the article wisely notes, “a Buffett purchase is a signal that a company is solid, but it’s not a guarantee that the price will rise.” If you’re comfortable with a high‑growth, high‑valuation tech play and can tolerate the associated regulatory risk, Alphabet remains a compelling candidate. If you’re more risk‑averse, you might look for a valuation sweet spot that aligns with your comfort level.
Read the Full The Motley Fool Article at:
[ https://www.msn.com/en-us/money/news/should-you-buy-alphabet-stock-after-warren-buffetts-new-4-billion-bet/ar-AA1R00zf ]
