Veteran investor Warren Buffett has thrown his weight firmly behind Google. In an interview, he said that Alphabet, the parent company of Google, and its stock (GOOGL) could beat 90% to 95% of the stocks picked by Wall Street. The comment appeared to lift investor sentiment right away, and soon after the interview aired GOOGL rallied about 3.65% to $370.36. Buffett's firm, Berkshire Hathaway, currently holds roughly $31 billion worth of GOOG shares, a position that trails only Apple and American Express in the portfolio.
Whose Decision Was the Purchase
Many assumed that Berkshire Hathaway's recent Google stock buying was driven by the company's new CEO, Greg Abel. Buffett, however, clarified that he was the one who initiated the purchase. The seasoned investor did point out that Abel still has the final say.
Why Buffett Is Bullish on Google
Buffett's confidence in Google is hardly a surprise once you look at the numbers. Alphabet reported a 22% jump in first-quarter revenue, which climbed to $110 billion. Google Cloud sales, meanwhile, surged by nearly 63%. According to the filing, the company generated $174 billion in operating cash flow over the last year.
The Risks He Flagged
Even with his upbeat view on the stock, Buffett did not ignore the risks. Alphabet plans to spend between $180 billion and $190 billion in capital expenditure this year. He noted that this figure is far higher than anything railroads ever spent.
A Split Verdict on Wall Street
Analyst opinion on Google is divided. Citi and Morgan Stanley raised their price targets for the stock to $671 and $415, respectively. Others, however, trimmed their forecasts. Wells Fargo cut its target from $435 to $416, while UBS lowered its Google price target from $410 to $400. Wall Street's average target for the company currently sits at around $435.78.
Elon Musk Weighs In
Google's foundational work has also drawn praise from Elon Musk. In a podcast, Musk said that Google would be one of the biggest beneficiaries of the AI boom, thanks to the work it has done over the past few decades.
