Warren Buffett has raised doubts about the enormous cost of the artificial intelligence race, warning that technology companies are now committing sums rarely seen during the software industry’s earlier decades.

But Buffett is not staying away from the sector. Berkshire Hathaway has built an Alphabet investment worth nearly $30 billion, placing one of its largest bets behind a company preparing to spend as much as $190 billion this year.

Buffett’s concern was not whether AI will become important. It was whether the profits will justify the price of building it.

“That’s real money”

During a rare CNBC interview, Buffett discussed the hundreds of billions of dollars that companies including Alphabet, Microsoft and Meta are pouring into chips, data centers, power systems and other AI infrastructure.

“That’s real money,” Buffett said. “That’s the game they’re playing now. They weren’t playing that game with computer software.”

The figures explain his caution.

Alphabet expects capital expenditures of between $180 billion and $190 billion in 2026. Microsoft has said its calendar-year spending will reach roughly $190 billion, while Meta recently raised its forecast to between $125 billion and $145 billion. Together, the three companies could spend more than half a trillion dollars this year.

Microsoft spent $31.9 billion on capital projects during its latest reported quarter. Its free cash flow for the same period was $15.8 billion, reflecting the effect of its expanding infrastructure program.

The companies argue that demand is already supporting the investment. Alphabet said demand for AI computing resources was exceeding available capacity, while Microsoft expects its infrastructure to remain constrained through at least the end of 2026.

Buffett’s warning concerns what happens if those returns fall short.

Alphabet’s investment bill is still rising

Alphabet increased its 2026 capital spending forecast to between $180 billion and $190 billion after completing its acquisition of energy infrastructure company Intersect. It also expects capital expenditures to rise significantly again in 2027.

For comparison, Alphabet generated $174 billion in operating cash flow during the 12 months ending March 31, 2026. This does not mean the company faces an immediate funding shortfall, but it shows how large its AI program has become relative to the cash produced by its operations.

Alphabet has also turned to outside financing. In June, it announced an equity capital raise initially expected to total $80 billion, including a $10 billion private placement with Berkshire Hathaway. The company said the proceeds would help expand its AI infrastructure and global computing capacity.

Over the preceding year, Alphabet had already raised more than $85 billion in debt, pushing its total debt balance above $100 billion.

Buffett personally backed the Alphabet investment

Despite his concern about the scale of AI spending, Buffett said the decision to invest in Alphabet came from him, not Berkshire’s new chief executive Greg Abel.

Berkshire’s regulatory filing shows that it owned approximately 57.8 million Alphabet shares at the end of March. The June private placement added about 28.6 million Class A and Class C shares. Assuming Berkshire has not changed the position since then, it now holds roughly 86.4 million Alphabet shares.

Based on Alphabet’s closing prices on July 17, the combined position was worth approximately $30 billion.

Buffett said Alphabet was more likely to become a winner than “90% or 95%” of the companies marketed through Wall Street.

His investment does not settle the debate over whether Big Tech is overspending on AI. It shows that Buffett is separating that risk from the strength of Alphabet’s existing business.

Google Search, YouTube and Google Cloud already generate substantial revenue. Alphabet also has the cash flow and access to financing needed to continue building infrastructure on a scale that smaller AI companies cannot match.

Buffett is backing one of the companies most capable of surviving the AI spending race. His warning is that survival alone will not be enough: the investment must eventually produce returns.