Alphabet (GOOGL) has come under pressure in recent weeks following a strong rally earlier this year. Despite solid performance from Google Cloud and active expansion of the Gemini ecosystem, investors have started to reassess the scale of the company’s AI expansion more cautiously.
The main driver of the pullback is a sharp increase in capital expenditures: Alphabet confirmed plans to invest up to $180–185 billion in AI infrastructure and data centers in 2026. The market is concerned that spending is rising faster than the short-term returns from AI monetization. (fxleaders.com)
Pressure on the search business intensifies
Additional pressure is coming from a reassessment of the sustainability of Google’s dominance in search. Following Google I/O 2026, the company accelerated the rollout of AI Mode and AI Overviews, but the market is increasingly discussing the risk of shifting user behavior toward AI assistants and alternative search platforms. At the same time, the U.S. antitrust case continues, with regulators pushing for restrictions on Google’s search business and broader access for competitors to the company’s search data. (marketbeat.com)
AI business remains the main growth driver
Despite the current pullback, Alphabet’s fundamental outlook remains strong. Google Cloud continues to show one of the highest growth rates among big tech companies, while Gemini is gradually becoming the core element of the entire Google ecosystem—from Search to Workspace and Android. Many analysts continue to raise their price targets for GOOGL, viewing the current correction as a cooling phase after an overheated rally rather than the start of a long-term trend reversal. (stockanalysis.com)
Key question for the market: return on AI investments
At this stage, investors are no longer focused solely on Google’s leadership in AI, but on the company’s ability to maintain margins and justify its record infrastructure spending. The coming quarters for GOOGL will be defined by earnings dynamics, the pace of Gemini monetization, and the regulatory impact on the search business. The balance between AI-driven growth and rising costs is becoming the key valuation factor for Alphabet.
Near-term outlook
The inability of bulls to break above resistance near the $393 level signals the risk of another move lower toward support around $382. A break below this level would increase bearish pressure and open the path toward $380–375, although buying interest may emerge on dips.
In the long term, as previously noted in Alphabet weakens as concerns grow over cost of AI race, the outlook remains constructive.
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