Google struggles to regain momentum as investors reassess AI returns
GOOGL is trading around $336 on September 8 and is trying to stabilize after a prolonged decline from the August highs above $400. The pressure is now related not only to the broader rise in yields, but also to the fact that the market is becoming increasingly demanding in how it evaluates the efficiency of Alphabet’s AI cycle.
283.13
326.23
Against this backdrop, the company’s participation today in the Goldman Sachs Communacopia + Technology Conference could become an additional source of commentary on Cloud, infrastructure, and AI monetization. At the same time, the recent court decision not to require the sale of AdX and the publisher ad server removed one of the heaviest structural risks for the advertising business, although behavioral restrictions for Google still remain on the agenda.
Cloud backlog highlights scale of underlying demand
The fundamental base remains strong. In the second quarter, Alphabet generated $119.8 billion in revenue, while Google Cloud grew 81.8% y/y to $24.8 billion, with the segment’s operating income reaching $8.8 billion and its margin 35.6%. More importantly, Cloud backlog increased to $514 billion, meaning demand for AI infrastructure is still clearly running ahead of available capacity.
At the same time, Alphabet raised its 2026 CapEx forecast to $195–205 billion, while free cash flow declined noticeably due to accelerated data-center construction and purchases of computing capacity. This gap between very strong demand and a heavy cash investment cycle is now becoming the main valuation factor.
Analysts remain constructive despite rising capital burden
Analysts, meanwhile, remain broadly constructive. Wolfe Research raised its Google Cloud growth forecasts to 81% in 2026 and 48% in 2027, while also increasing its estimate for Alphabet’s 2027 CapEx to $300 billion. TD Cowen raised its target to $475 from $450, betting on the scaling of AI infrastructure and growth in computing capacity.
In other words, the market is already beginning to price in not just strong demand for Gemini and Cloud, but a multi-year investment cycle, where the key question will not be the size of CapEx itself, but Alphabet’s ability to maintain high margins and convert backlog into revenue faster than the capital burden grows.
$334–332 defines immediate downside risk
On the hourly chart, the short-term structure remains weak. After a series of lower highs, GOOGL remains below the main moving averages, while the $340–344 area now acts as the nearest resistance. Support is located around $334–332, and a break below it would increase the risk of a decline toward $328–325.
To improve the picture, buyers first need to reclaim $344–348 and then consolidate above $352. Until that happens, the base case remains cautiously negative: fundamentally, as noted in the article Google loses momentum as AI investment burden comes into focus, Alphabet retains one of the strongest AI profiles among hyperscalers, but the stock is likely to remain under pressure until the market sees more convincing evidence that record investment is beginning to generate proportionate returns.
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