GOOGL tests $342 as sellers retain control

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GOOGL tests $342 as sellers retain control

Record capex raises questions over returns

However, this process requires enormous investment: capital expenditures reached $44.9 billion in the second quarter, while free cash flow turned negative at $5.9 billion. In addition, Alphabet raised nearly $50 billion in equity in June, including to scale AI infrastructure and computing capacity.

The medium-term fundamental backdrop remains constructive, but the market is becoming increasingly sensitive to the question of returns on these investments. On the one hand, strong Search growth shows that the expansion of AI Overviews and Gemini has so far not disrupted the core advertising business, while accelerating Google Cloud growth is reducing Alphabet’s dependence on advertising. On the other hand, regulatory risks and changes within the AI team are creating pressure. Last week, the company announced the departure of one of its key AI executives, Jeff Dean, after 27 years at Google, which intensified concerns about team stability amid fierce competition in generative AI.

Antitrust risks remain an overhang

An additional risk remains antitrust pressure around Search and Chrome. At the current price of around $343, the P/E multiple stands at roughly 17, so Alphabet’s valuation looks moderate relative to many other megacaps. However, the market will require evidence that growth in Cloud and Gemini can offset record capex.

Pixel 11 launch reinforces Google’s AI hardware strategy

Alphabet also drew attention today after Google unveiled its new Pixel 11, Pixel 11 Pro, Pixel 11 Pro XL and Pixel 11 Pro Fold smartphones at the Made by Google event. The new devices are built around the Tensor G6 chip and deeper Gemini integration, with Google positioning AI as a core part of the user experience rather than an add-on feature. The company also introduced major camera upgrades, faster charging and new Gemini-powered tools, while the Pixel 11 lineup starts at $899 and the Pro models at $1,099.

From an investment perspective, the launch is unlikely to materially alter Alphabet’s earnings profile in the near term because hardware remains small relative to Search, advertising and Cloud. However, it strengthens the broader AI ecosystem around Gemini and gives Google greater control over how its models are distributed to consumers. The launch also intensifies competition with Apple ahead of the next iPhone cycle and provides another channel for monetizing Google AI subscriptions and services.

Investors have so far not been impressed by the Pixel devices unveiled today, and selling in the shares continues, with GOOGL testing the $342 level. Support around $330 could be tested next, where moderate demand may emerge. A break below this support, as written in Alphabet slips toward $352 as AI spending and technical pressure weigh on shares, would lead to a decline toward $325-$320. Even in that case, the outlook for GOOGL would remain constructive.

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