<p>Last year, Warren Buffett corrected one of his previous investing mistakes. He initiated a sizable position in Google parent <strong>Alphabet</strong> <span class="ticker-mention inline-flex items-center font-bold">(GOOG <span class="ml-1 text-red-900">2.19%</span>)</span> <span class="ticker-mention inline-flex items-center font-bold">(GOOGL <span class="ml-1 text-red-900">1.73%</span>)</span>, several years after admitting that he regretted not buying the stock earlier.</p>
<p>After Buffett stepped down as Berkshire Hathaway's <span class="ticker-mention inline-flex items-center font-bold">(BRKA <span class="ml-1 text-green-900">+1.82%</span>)</span> <span class="ticker-mention inline-flex items-center font-bold">(BRKB <span class="ml-1 text-green-900">+2.08%</span>)</span> CEO at the end of 2025, his successor, Greg Abel, more than tripled the conglomerate's stake in Alphabet. The stock now ranks as Berkshire's fifth-largest holding. </p>
<p>But Google's stock has fallen by double digits over the past few weeks. Are Buffett and Abel worried that they made a mistake buying the stock? I don't think so. If you own shares of Alphabet, here's why you shouldn't be worried, either.</p>
<div><img alt="Google logo in front of a dinosaur fossil and people in the background." width="880" height="528" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NzYzNTcvZGlub3NhdXItc2tlbGV0b24td2l0aC1nb29nbGUtbG9nby1oYW5kaW5nLWZyb20tbW91dGhfYWxwaGFiZXRfZ29vZ2xlLmpwZyZ3PTM4NDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NzYzNTcvZGlub3NhdXItc2tlbGV0b24td2l0aC1nb29nbGUtbG9nby1oYW5kaW5nLWZyb20tbW91dGhfYWxwaGFiZXRfZ29vZ2xlLmpwZyZ3PTM4NDA"/>
<p>Image source: Getty Images.</p>
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<h2>Why the stock's decline isn't really scary</h2>
<p>Three factors explain Alphabet's decline since May. None of them should be scary to investors, in my opinion.</p><div><div id="foolcom_sidebar_top_container"><div><div><div></div><div></div><div></div></div></div><div></div></div></div>
<p>First, Alphabet's first-quarter update revealed another significant increase in planned capital expenditures. The company provided capex guidance of $180 billion to $190 billion for full-year 2026. Some investors have become jittery over the sky-high spending on artificial intelligence (AI) infrastructure by Alphabet and other tech giants. </p><div></div>
<p>Second (and related to the first factor), Alphabet announced in June that it was raising $80 billion through private placement equity offerings. The company said that these offerings are part of the plan &#34;to fund investments in its world-class AI compute infrastructure to meet its unprecedented customer demand.&#34; </p><div><div id="in_line_article_pitch_container"><div><div><div><div></div></div><div><div></div><div></div><div></div></div></div></div><div></div></div></div>
<p>Third, two high-profile defections last week caused the stock to experience its worst day in more than a year. Noam Shazeer, Google's vice president of engineering and one of the leaders of the Gemini AI models, announced he was leaving to join OpenAI. Two days later, Google DeepMind vice president and engineering fellow John Jumper announced that he was leaving to join Anthropic. Jumper received a Nobel Prize with Google DeepMind CEO Demis Hassabis for developing AlphaFold, an AI system that predicts protein structures. </p>
<p>Anat Askkenazi, CFO of Alphabet and Google, said in the Q1 update that the company continues to see &#34;unprecedented internal and external demand for AI compute resources.&#34; Ashkenazi pointed out that investments in AI infrastructure are driving record revenue and backlog growth. </p>
<p>What about the departures of key AI leaders? It is somewhat concerning. However, this kind of musical chairs is commonplace in the industry. Alphabet still has a huge level of AI talent and the money to recruit more people.</p>
<section><div><div><div><small><div>Expand</div></small></div><div><img alt="Alphabet Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0dPT0dMLnBuZyZ3PTEyOA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0dPT0dMLnBuZyZ3PTEyOA"/></div><div><h2>NASDAQ: GOOGL</h2><div>Alphabet</div></div></div><div><div><div>Today's Change</div><div>(-1.73%) $-5.95</div><div>Current Price</div><div>$337.76</div></div><div></div></div></div><div><div></div><div><h3>Key Data Points</h3><div><div>Market Cap</div><div>$4.1T</div><div>Day's Range</div><div>$334.73 - $346.36</div><div>52wk Range</div><div>$172.77 - $408.61</div><div>Volume</div><div>1.9M</div><div>Avg Vol</div><div>31.8M</div><div>Gross Margin</div><div>60.43%</div><div>Dividend Yield</div><div>0.25%</div></div></div></div></section>
<h2>Buffett and Abel aren't worried</h2>
<p>I have no doubt whatsoever that neither Buffett nor Abel is losing sleep over the factors behind Alphabet's recent sell-off. For one thing, Abel led the charge for Berkshire's additional $10 billion investment in Alphabet that was part of the private placement. If he had any qualms about Alphabet spending more on AI infrastructure, he would never have committed such a significant amount of Berkshire's capital.</p>
<p>It's important to remember Buffett's perspective on stock declines. At Berkshire Hathaway's 2010 annual shareholder meeting, he said, &#34;If you have a temperament that when others are fearful you're going to get scared yourself, you know, you are not going to make a lot of money in securities over time, in all probability.&#34;</p>
<p>What's more, the legendary investor gave a decidedly contrarian opinion. He stated that some investors buy a stock and then &#34;think if it goes up it's wonderful, and if it goes down it's bad.&#34; Buffett explained, &#34;We think just the opposite. When it goes down, we love it, because we'll buy more. And if it goes up, it kills us to buy more.&#34;  </p>
<h2>An opportunity for long-term investors</h2>
<p>As usual, Buffett was right. A pullback in a wonderful company's share price presents an excellent buying opportunity for long-term investors. And Alphabet remains a wonderful company.</p>
<p>The record Google Cloud backlog provides excellent revenue visibility. Google Search continues to grow, with generative AI serving as a tailwind rather than the &#34;Google killer&#34; some predicted. Waymo is the leader in autonomous ride-hailing. Alphabet is even now part of the Dow Jones Industrial Average <span class="ticker-mention inline-flex items-center font-bold">(^DJI <span class="ml-1 text-red-900">0.09%</span>)</span>, reflecting how important it has become to the U.S. economy. </p>
<p>Don't be surprised if Berkshire's next 13-F filing reveals that the conglomerate took advantage of Alphabet's decline to load up on more shares. After all, that's the Warren Buffett way.</p>
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<p>Despite Alphabet's stock dropping double digits due to high AI capex, $80B equity raise, and key executive departures, Warren Buffett and successor Greg Abel remain confident. Abel tripled Berkshire Hathaway's stake, viewing the decline as a buying opportunity consistent with Buffett's contrarian philosophy. The article argues that strong cloud backlog, search growth, and Waymo leadership make Alphabet a solid long-term investment.</p>

- Warren Buffett and his successor, Greg Abel, significantly increased Berkshire Hathaway's stake in Alphabet, making it their fifth-largest holding, despite recent stock declines.  
- Factors causing Alphabet's stock drop include rising capital expenditures for AI infrastructure, a substantial equity offering, and departures of key AI leaders, though executives maintain strong demand for AI compute resources.  
- The stock's decline presents a buying opportunity for long-term investors, as Alphabet continues to show growth potential and innovation in various sectors, supporting its value proposition.

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Google Stock Is Down Double Digits. Warren Buffett and Greg Abel Aren't Worried -- and Here's Why You Shouldn't Be Either.