Berkshire Hathaway (NYSE:BRK, BRK.B)) Chair Warren Buffett believes Alphabet (NASDAQ:GOOG, GOOGL)) has a better chance of long-term success than nearly everything marketed on Wall Street. Yet despite Berkshire’s massive investment in the Google parent, Buffett still wouldn’t rank it among the conglomerate’s very favorite businesses.

"I would say that I don’t like it as well as at least four or five other businesses that we own," Buffett told CNBC recently.

The remark may seem surprising considering Alphabet has grown into one of Berkshire’s largest holdings. But Buffett made clear that owning a great company isn’t the same as considering it one of the very best businesses Berkshire owns.

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Buffett also answered one of the biggest questions surrounding the investment: Who decided to buy Alphabet in the first place?

CNBC’s Becky Quick asked whether the position reflected the investing style of Berkshire CEO Greg Abel, who succeeded Buffett as chief executive in January.

"I initiated it," Buffett told Quick. "I am not doing anything that he doesn’t approve of. He’s not doing anything I don’t approve of. We talk all the time… but he is the decider."

The comments appear to settle speculation that Berkshire’s rapidly growing Alphabet position was Abel’s first major move as CEO. Instead, Buffett said the investment originated with him while emphasizing that he and Abel remain closely aligned on Berkshire’s investment decisions.

Berkshire first disclosed its Alphabet stake during Q3 2025 before steadily increasing the position. Earlier this year, the conglomerate also participated in a $10 billion private placement to help finance Alphabet’s artificial intelligence infrastructure, pushing the investment to more than $31 billion.

‘More Likely To Be a Winner…’

Although Buffett stopped short of calling Alphabet one of Berkshire’s very best businesses, he left little doubt about how highly he views the company’s long-term prospects.

"I think they’re more likely to be a winner based on the record than probably 90% or 95% of what gets merchandised through Wall Street," Buffett told Quick.

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He contrasted Alphabet’s operating history with many investments promoted by Wall Street, arguing that too much attention is paid to quarterly forecasts instead of the economics that drive long-term business success.

"The trick in life is to find—I mean investing—is to find businesses that are going to earn high returns on capital for an extended period of time," Buffett said.

That philosophy has guided Berkshire’s investments for decades and remains the lens through which Buffett evaluates every company, regardless of industry.

Why Coca-Cola Still Sets the Standard

So why doesn’t Alphabet rank alongside Buffett’s favorite Berkshire businesses?

Part of the answer comes down to capital intensity.

Buffett pointed to Coca-Cola (NYSE:KO), which Berkshire has owned for roughly 45 years, as an example of a business capable of generating exceptional returns without requiring constant reinvestment.

"We don’t have a thing to do with running that business," Buffett said. "It’s a very good business."

He also highlighted American Express (NYSE:AXP) and Berkshire’s wholly owned Burlington Northern Santa Fe railroad as businesses that have consistently produced high returns on capital over long periods.

Alphabet, by contrast, operates in an industry where the largest players are spending hundreds of billions of dollars to compete in artificial intelligence.

"The real question with Google and all of its competitors now, because they’re all laying out hundreds of billions," Buffett told Quick. "That’s real money."

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The observation wasn’t a criticism of Alphabet. Instead, it reflected Buffett’s preference for businesses with durable competitive advantages that don’t require enormous capital investments simply to maintain their leadership positions.

Buffett didn’t identify all of the businesses he ranks ahead of Alphabet. "You’re not going to get the whole portfolio out of me," he told Quick.

Even after finally making Alphabet one of Berkshire’s largest holdings, Buffett’s latest comments suggest his investing philosophy remains unchanged. He continues to look for businesses capable of earning high returns on capital for decades. 

For individual investors, finding the next long-term winner can be more challenging than it was for Berkshire, which has often been able to buy large stakes—or even entire businesses—before they reached their full potential. Once a company has already grown into a trillion-dollar giant like Alphabet, much of that explosive growth may already be reflected in the stock price.

That’s one reason some investors also spend time researching private companies before they reach the public markets. Mode Mobile, for example, is developing technology that lets users earn rewards from everyday smartphone activity and has opened investment opportunities ahead of a potential IPO. 

While private investments carry significantly greater risk than established public companies, they illustrate the same principle Buffett has followed for decades —identifying businesses with compelling long-term potential before they’re fully valued by the broader market.

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