Warren Buffett’s Primary Reason for Buying Alphabet is Mine and Should Be Yours

Earnings Impact 4
โดย 247wallst.com·Read original
Summary · why it matters

Alphabet’s Google Search revenue grew 19% to $60.40 billion and Google Cloud surged 63% to $20.03 billion in the first quarter of fiscal 2026, reinforcing the company’s tollbooth-like dominance on internet advertising and enterprise AI. The cloud backlog nearly doubled quarter over quarter to over $460 billion, validating massive capital spending that reached $35.67 billion, up 107.44%, and pressured free cash flow down 46.63% to $10.12 billion. Despite the capex surge, operating cash flow still grew 26.67%, and the stock trades at a price-to-earnings ratio of 26 after an 83.14% trailing-year gain. The author argues Alphabet’s combination of search, cloud, YouTube, and Waymo optionality makes it a stronger AI value than Microsoft, which grows overall revenue at 18.3% versus Alphabet’s 63% cloud rate, and Meta, which lacks a cloud franchise. Alphabet also raised its dividend 5% to $0.22 per share.

Impact on stocks 3

Artificial Intelligence± Mixed · 3 stocks
Alphabet Inc Class C
GOOG
▲ PositiveDemandrelevance

Google Search revenue grew 19% and Google Cloud surged 63%, with cloud backlog nearly doubling to over $460 billion, indicating strong end-customer demand.

Meta Platforms Inc.
META
▼ NegativeCompetitionrelevance

Article contrasts Alphabet's 63% cloud growth with Meta's lack of a cloud franchise, implying Meta is at a competitive disadvantage in AI.

Microsoft Corporation
MSFT
▼ NegativeCompetitionrelevance

Article argues Alphabet is a stronger AI value than Microsoft, which grows overall revenue at 18.3% versus Alphabet's 63% cloud rate, implying Microsoft is less competitive.

Theme Impact 3

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