Every quarter, investors anxiously await the release of Berkshire Hathaway's 13-F filing to get an update on its holdings. Even though Warren Buffett no longer runs the company, he continues to hold sway over its stock picks, and investors watch the changes from quarter to quarter closely.
Although the latest 13-F filing shows positions in 26 different companies, just five companies make up 72% of its holdings. However, this portfolio has existed for over 60 years, making it likely that some of these stocks are better to hold right now than to buy.
Knowing that, I think investors should probably lean toward the newest pick among these stocks, meaning Google parent Alphabet (GOOGL +1.22%) (GOOG +1.05%) is probably the stock of choice.
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Why Alphabet?
Admittedly, choosing Alphabet among the five seems like an easy decision. Berkshire has not traded any shares of Coca-Cola or American Express since the 1990s. Also, the company has steadily sold shares of Bank of America and Apple for several quarters.
In contrast, Alphabet appears to stand out over its "Magnificent Seven" counterpart and Berkshire's other top holdings. It remains the most prominent digital advertising company, a business that has generated tremendous amounts of revenue and free cash flow for years. Although Alphabet envisions a day when digital ads are a less prominent part of its business, Google advertising still accounted for 68% of the company's revenue in the second quarter of 2026.
Moreover, Google Cloud has evolved into a major revenue driver, holding steady as the third-largest cloud provider as it supports the company's artificial intelligence (AI) initiatives. In Q2 2026, it accounted for 21% of company revenue, up 82% from just one year ago. This is well above Alphabet's 24% overall growth rate for the quarter.
Additionally, its Waymo autonomous driving platform leads the way in that emerging industry. While the company did not mention Waymo in its latest earnings report, it is on track to drive considerable revenues in future years.
NASDAQ: GOOGL
Key Data Points
Addressing capital expenditures
However, despite those attributes, one aspect of Alphabet might give investors like Buffett pause -- its capital expenditures (capex). CEO Sundar Pichai raised Alphabet's capex guidance to the $195 billion to $205 billion range this year, following $91 billion in 2025 spending. This is intriguing since Berkshire sold its Amazon position recently, another tech giant spending heavily on capex.
Furthermore, Alphabet issued tens of billions in additional debt, a move that might have been unthinkable until recently. Its long-term debt has now reached $98 billion, up from $47 billion six months ago.
Nonetheless, Alphabet has something that Amazon no longer has -- positive free cash flow. Buffett refers to free cash flow as "owner earnings," placing significant importance on this metric. Investors should also note that free cash flow excludes capex spending. Even with that caveat, the Google parent reported $53 billion in free cash flow over the trailing 12 months, indicating it can afford these massive investments.
Finally, it is likely Alphabet's price-to-earnings (P/E) ratio of 17 had a hand in this choice. This, along with its AI leadership and revenue growth, make it a high-quality enterprise selling at a low price.
Moving forward with Alphabet
Considering Alphabet's strength in AI, financial condition, and value proposition, I recommend it as my top pick for August among Berkshire's top-5 holdings.
Indeed, Buffett had long favored Alphabet's peer Apple. However, Alphabet's AI leadership has helped the Google parent stand out. More recently, it has helped drive Google Cloud's rapid growth, and the prospects for Waymo to become a top autonomous driving company should help solidify its position in the AI industry.
Moreover, the fact that it can spend heavily on capex while maintaining positive free cash flows bodes well for the company's future. When also considering its low valuation, it is easy to understand why Alphabet stock is probably the most appealing of these stocks to buy in August.
