Alphabet stock hit by AI fatigue and EU probes after Oracle earnings shock

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Oracle shock sparked GOOGL selloff

Highlights

GOOGL stock fell 3.6% Thursday and erased gains from Fed-driven early rally.
AI sentiment turned negative after Oracle’s earnings miss sparked broader sector weakness.
EU investigation and Waymo recall added legal and reputational pressure on Alphabet.

Earlier in the week, GOOGL stock had reacted positively to the Fed’s quarter-point rate cut, which marked the third reduction of the year. Liquidity conditions were further supported by the central bank’s announcement of $40 billion in treasury bill purchases. These efforts created a bullish environment for growth stocks and lifted Alphabet stock midweek to test the top resistance trendline of the bearish price channel that has shaped its pullback from the late November all-time high of $328.80.

Alphabet price dynamic (Nov - Dec 2025). Source: Tradingview

However, the rally quickly faded as sector sentiment turned negative. A 15% plunge in Oracle shares on Thursday triggered a broad AI correction. Oracle’s earnings report revealed weaker-than-expected cloud revenue, raising doubts about the near-term profitability of AI infrastructure spending. The selloff spilled into other major tech stocks and dragged Alphabet lower as investors reassessed the sustainability of AI-related capital expenditure across the industry.

Legal risks intensify as EU probes Alphabet’s antitrust compliance and AI practices

Further pressure came from Europe. Reports emerged that Alphabet’s Google unit could face penalties from EU antitrust regulators over violations of the Digital Markets Act. Regulators accused the company of favouring its own services and failing to make sufficient adjustments to comply. At the same time, a separate probe was launched into Google’s use of publisher content for AI training. These developments add legal and reputational risks to Alphabet’s outlook.

Meanwhile, domestic regulatory noise added to investor unease. The U.S. National Highway Traffic Safety Administration disclosed that Alphabet’s autonomous vehicle unit, Waymo, had recalled over 3,000 vehicles due to software issues. This followed multiple safety complaints and media reports, leading to an official probe into Waymo’s operations.

Despite Thursday’s steep decline, GOOGL stock found technical support at the lower boundary of the bearish channel. The price closed the day at $312.50, bouncing off that support zone. In Friday’s premarket session, GOOGL is trading around $314.20, showing a 1.75% rebound from Thursday’s intraday low.

Price is now approaching the 20 and 50 EMA on the 1-hour chart, both of which overlap near $316. A breakout above this resistance could extend the recovery toward the top of the descending channel. Failure to break above may suggest that AI fatigue and regulatory risks are still weighing heavily on sentiment.

We discussed how Alphabet’s breakout attempt at $321.25 failed as weak volume signaled a lack of conviction. Price dropped toward $317 after Powell’s comments reinforced a cautious easing outlook.

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