Alphabet is attempting to recover after a sharp June correction, supported by continued strength in Google Cloud and growing enterprise demand for Gemini AI services. The company's latest quarterly results remained robust, with revenue increasing 22% to about $110 billion, while Google Cloud revenue surged 63% to $20 billion, reinforcing confidence that AI remains a powerful long-term growth driver.
AI investment remains the biggest debate for investors
The strongest bullish argument is accelerating AI adoption, but investors remain focused on the cost of maintaining leadership. Alphabet continues to invest aggressively in data centers, TPUs, and AI infrastructure, with 2026 capital expenditure guidance of roughly $180-190 billion. Recent reports that Google limited Gemini access for Meta and some smaller customers due to capacity constraints have also been interpreted as evidence that AI demand currently exceeds available supply.
Technical picture shows recovery but trend remains cautious
The 4-hour chart shows Alphabet rebounding from the $340 area and trading near $357, recovering above its short-term moving averages. However, the stock remains below the declining 100-period moving average, while the $360-370 zone represents the first important resistance area. The longer-term 200-period moving average continues to provide support, suggesting the broader uptrend has not been fully broken despite the recent correction. A sustained move above medium-term resistance would improve the technical outlook, while failure to hold recent support could revive selling pressure.
Markets await proof that AI investment will deliver higher returns
Investor attention is now shifting toward the next earnings season and evidence that Alphabet's massive AI spending is translating into stronger monetization across Search, Cloud, Gemini, and YouTube. The company's recent addition to the Dow Jones Industrial Average has increased its market visibility, although the move is largely symbolic because of the index's price-weighted methodology. As long as cloud growth remains strong and enterprise AI demand continues to expand, Alphabet's long-term investment case remains supported despite concerns over near-term capital spending, what I did warn about in the article Alphabet rebounds as AI demand offsets capex risk.
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