Buffett warns of market gambling, endorses Alphabet over 95% of picks

Warren Buffett issued a sharp warning about speculative trading and endorsed Alphabet Inc. as beating 95 percent of Wall Street's stock recommendations, speaking in a rare CNBC interview on July 15.

"It's tough to find values when everybody is preferring gambling," Buffett, 95, chairman of Berkshire Hathaway Inc., told CNBC's Becky Quick. He likened the stock market to "a church with a casino attached," criticizing the explosion of single-day options trading as pure speculation.

Alphabet shares rose 3.6 percent to $370.21 following the interview. Berkshire's position in the Google parent, built in three phases starting in the third quarter of 2025, is now valued at more than $31 billion, making it the conglomerate's third-largest equity holding behind Apple Inc. and American Express Co.

Buffett said Alphabet "has a better chance of being a winner than 90 percent to 95 percent of the stocks Wall Street pushes, because Wall Street cares about whether it can sell them." He personally confirmed he initiated the trade, ending months of speculation that the decision came from Berkshire's incoming CEO Greg Abel. Berkshire bought Class A shares at an average price of $351.81 and Class C shares at $348.20, according to Alphabet's filings with the Securities and Exchange Commission. The most recent addition came in June through a $10 billion private deal tied to Alphabet's $80 billion AI fundraising.

The endorsement comes as markets trade near all-time highs, driven by a strong earnings season and AI-related stocks, despite persistent inflation and costs from the conflict with Iran. Day traders make up less than 10 percent of stock market brokers, and only about 5 percent turn a profit, according to a MarketWatch report. "Since humans love to gamble so much, there's more money in actually cultivating gamblers than there are cultivating investors," Buffett said.

Alphabet reported first-quarter revenue of $110 billion, up 22 percent from a year earlier, with Google Cloud sales jumping 63 percent. The company generated $174 billion in operating cash flow over the past 12 months. However, Buffett acknowledged risks, noting Alphabet's capital expenditure plan of $180 billion to $190 billion for 2026, with further increases expected in 2027 — a scale he called "real money" that exceeds anything the railroad industry has ever invested. He also conceded that missing Google in its earlier, cheaper days was a mistake.

The Oracle of Omaha's track record adds weight to the call. His 2016 purchase of Apple became Berkshire's most profitable investment. Whether Alphabet can replicate that success will be tested when it reports quarterly earnings later this month.

This article is for informational purposes only and does not constitute investment advice.