The Oracle of Omaha is finally investing in tech stocks, and that’s purely because they’ve changed their capex spending model to stay competitive in the AI race.
“The real question with Google and all of its competitors now, because they’re all laying out hundreds of billions, and… that’s real money,” Warren Buffett told CNBC. “That’s the game they’re playing now. They weren’t playing that game with computer software.”
Buffett, who has long steered clear of technology companies because he didn’t understand them, revealed that he was the one behind Berkshire’s $31 billion investment in Alphabet, not incoming Berkshire CEO Greg Abel.
“I initiated it,” Buffett said. “He’s not doing anything I don’t approve of. We talk all the time.”
Buffett, who admitted, “I made a mistake” when asked why he passed on Google for years, said he finally became attracted to Google and its hyperscaler rivals when they began spending like railroads and utilities—pouring hundreds of billions of dollars into data centers and chips, the kind of capital-intensive buildout Buffett understands because it looks like the businesses he’s owned for decades.
This is decidedly different from how they spent their capex in the past, and it’s primarily because they’re trying to stay competitive in the ever-changing AI race.
“They don’t have any choice.”
Asked why he’d picked Alphabet over Amazon, Microsoft or the rest of the Magnificent Seven, Buffett demurred—”I don’t want to sit around knocking the others”—before framing the AI spending race between the hyperscalers as something closer to a trap than a clear victory.
“They’re now playing a game, in many cases, or in some cases, where they’re playing a game they don’t want to play,” Buffett said, while referring to IBM’s historic revenue miss this week. “IBM would have loved it if they just kept playing the game that IBM was playing in the 30s or the 40s or the 50s or the 60s.”
Google’s stock surge
Alphabet shares surged nearly 4% on Wednesday, pushing Google co-founder Larry Page’s net worth above $300 billion for just the second time ever, according to Forbes—and the stock was still climbing Thursday. Berkshire now holds a $31 billion stake in Alphabet after it began building it up in the third quarter of 2025. The buying accelerated this year with an additional $10 billion spent just last month. Buffett said Alphabet was “number five or six” in Berkshire’s holdings, and his CNBC comments added $8 billion to Page’s fortune.
Still, Buffett explained Google is “more likely to be a winner based on the record than probably 90% or 95% of what gets merchandised through Wall Street”—a rare vote of confidence in a company doubling its AI spending up to $185 billion on AI, a spending spree that even keeps CEO Sundar Pichai up at night.
On Google’s Q4 earnings call in February, Pichai reflected on the AI capex surge and his concern about converting those billions of dollars of investment into data centers and overcoming compute bottlenecks, but struck an optimistic tone nonetheless.
“We are in a very, very relentless innovation cadence, and I think we are confident about keeping that momentum as we go through 2026,” Pichai said on the call.
