Missed Nvidia in 2009? This Rare Signal Is Flashing Again.\u00a0In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia.\u00a0For the first time in years, that same “Total Conviction” signal is flashing for a company 1\/100th the size of Nvidia.\u00a0Continue \u00bb<\/a> <\/p>\n For all of the hype about artificial intelligence (AI), Alphabet continues to earn most of its revenue from digital advertising. It began applying AI to its applications back in 2001. However, it has likely drawn more attention with Google Gemini, which seems to have answered the competitive threats from ChatGPT and Claude. <\/p>\n Moreover, it has leveraged the technology to drive growth at Google Cloud, the platform through which it provides foundational models, developer tools, and infrastructure for AI, including support for Google Gemini. So successful is its approach that Google Cloud grew its revenue by 82% year over year in the second quarter of 2026. <\/p>\n The Google parent has also leveraged AI through its autonomous driving subsidiary, Waymo. Its Waymo Driver platform utilizes AI as the foundation for autonomous driving, applying it to examine vehicles’ surroundings, anticipate human actions, and navigate streets safely. <\/p>\n These platforms allow Alphabet to benefit from AI from multiple sources. This makes it more likely that it will remain a market leader in the technology. <\/p>\n Alphabet’s financials <\/p>\n Another attribute of Alphabet that likely attracted Buffett’s attention was its financials. This goes far beyond its low valuation, though he likely appreciates the ability to buy the communications stock<\/a> at a price-to-earnings (P\/E) ratio of 17. <\/p>\n He probably also likes that the company holds more than $242 billion in liquidity, up from $127 billion one year ago. <\/p>\n Admittedly, the liquidity factor touches on an aspect of Alphabet that would probably make Buffett uncomfortable under most circumstances — its capital expenditures. The company has said it intends to spend between $195 billion and $205 billion on capex this year alone, largely on the build-out of its AI data center infrastructure. Consequently, it increased its long-term debt to around $123 billion, far above the $46.5 billion in long-term debt it had on the balance sheet at the end of June 2025. <\/p>\n Still, this spending is likely a major reason for Google Cloud’s revenue growth and the company’s 24% overall revenue increase. Moreover, it can likely afford this investment. Alphabet generated over $53 billion in free cash flow over the past four reported quarters. (That metric excludes capex spending.) Buffett often calls cash flows “owner earnings.” This may have been his justification for overlooking Alphabet’s massive capex spending, and could give retail investors a green light to invest as he does. <\/p>\n Investing in Alphabet <\/p>\n All things considered, Alphabet seems to be Warren Buffett’s favorite AI stock. The Google parent has successfully leveraged its AI prowess across platforms such as cloud computing and autonomous driving. Furthermore, it offers a reasonable valuation, liquidity, and strong free cash flows. <\/p>\n Given Alphabet’s potential for success and strong financials, this is one time that it might pay for average investors to follow in Buffett’s footsteps. <\/p>\n Should you buy stock in Alphabet right now? <\/p>\n Before you buy stock in\u00a0Alphabet, consider this: <\/p>\n The Motley Fool\u00a0Stock Advisor\u00a0analyst team just identified what they believe are the\u00a010 best stocks<\/a>\u00a0for investors to buy now\u2026 and\u00a0Alphabet\u00a0wasn’t one of them.\u00a0The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. <\/p>\n Consider when\u00a0Netflix\u00a0made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $419,408!*\u00a0Or\u00a0when\u00a0Nvidia\u00a0made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $1,348,694!* <\/p>\n That performance is why people listen. With a track record of\u00a0beating the S&P 500 by nearly 5x,\u00a0Stock Advisor\u00a0offers a distinct advantage. Don’t miss the latest top 10 list, available with\u00a0Stock Advisor, and join an investing community built for the long haul. <\/p>\n See the 10 stocks \u00bb<\/a> <\/p>\n *Stock Advisor returns as of August 19, 2026. <\/p>\n Will Healy<\/a> has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy<\/a>. <\/p>\n<\/a> Warren Buffett: Image source: The Motley Fool. Alphabet’s positioning in AI <\/p>\n