Why Buffett Would Buy Google (Alphabet) Today

Published: April 24, 2025
By: Track N Grow — Buffett-Style Investing, Powered by AI

1. Durable Competitive Moat — Stronger Than Ever

At the heart of Buffett-style investing is the concept of a “moat” — a durable competitive advantage that protects a company’s profits. Google has one of the widest moats in modern capitalism:

• Dominant Search Engine with >90% market share
• YouTube and its near-monopoly in video monetization
• Android OS, used by billions worldwide
• Google Cloud, scaling rapidly with 28% YoY growth
• AI Leadership through Gemini 2.5 driving user engagement

2. Financial Fortitude — Earnings Power & Cash Flow

Google’s financials reflect a fortress-like business:

• Revenue (2024): $350B
• Operating Margin: 32.1%
• EPS (2024): $8.04
• FCF CAGR (10Y): 19.7%
• EPS CAGR (10Y): 22.8%
• ROE (10Y Median): 18.8%
• ROIC (10Y Median): 17.8%
• Gross Margin: 58.2%
• Free Cash Flow Margin: 21.9%

3. Prudent Valuation — A Rare Deal on a Quality Compounder

Even after the earnings rally, Alphabet trades at:

• P/E: 18.6x
• EV/EBITDA: 13.9x
• EV/FCF: 24.4x

These are reasonable multiples for a business with near-60% gross margins and strong capital returns. This offers a solid margin of safety — a principle Buffett never compromises on.

4. Shareholder-Focused Capital Allocation

Alphabet just announced a $70 billion share repurchase authorization and initiated a dividend ($0.60/share annualized), showing confidence in its future cash flows. With minimal debt and robust earnings power, this is a Buffett-approved capital return strategy.

5. A Decade of Growth — Still More to Come

From 2015 to 2024:

• Revenue grew from $75B to $350B (CAGR: 18.2%)
• EPS rose from $1.14 to $8.04
• Operating discipline and returns remained strong

Now with AI as a tailwind, Alphabet’s next decade may be even more transformative.

🚨 Our Call Back in March

We identified Google as our top buy in March 2025 when it dipped below $160, and reiterated a stronger buy under $150. Even today, after its earnings rally, GOOGL remains attractively priced based on fundamentals.

This is the kind of long-term compounder we believe Buffett himself would be proud to hold.

Conclusion: A Buffett-Worthy Bet

Alphabet is not just a tech company — it's a cash-generating compounder with unmatched moats and durable returns, offered today at a price any value investor would appreciate.

If Warren Buffett were 30 years younger and investing today, Google would be one of his biggest bets.

Which one are you betting on for the next decade? Let us know in the comments below or explore more Buffett-style stock breakdowns at TracknGrow.com.

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