Google holds near $345 as AI infrastructure becomes next valuation driver

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AI spending reshapes Alphabet outlook

Investors reassess the AI trade

The shares have also benefited this week from a broader reassessment of the AI sector. Investors appear to be placing greater value on large technology platforms with proprietary cloud capacity, infrastructure, and distribution networks, while the race for outright leadership in foundation models is becoming somewhat less important in overall business valuation.

Core business growth remains strong

Alphabet’s latest quarterly results remain robust. Second-quarter revenue rose 24% year over year to $119.8 billion, with Google Services up 15% to $94.5 billion. Search & Other revenue increased 17% to $63.3 billion, while YouTube Ads grew 13% to $11.1 billion.

Google Cloud emerges as key growth engine

Google Cloud was the key source of acceleration. Revenue jumped 82% to $24.8 billion, operating income reached $8.8 billion, and the operating margin expanded to approximately 35.6%. Cloud backlog climbed to $514 billion, providing strong visibility into future revenue and reinforcing the view that demand for AI infrastructure continues to outpace available capacity.

Gemini ecosystem expands beyond AI models

The next area of focus is how Alphabet expands the commercial ecosystem around Gemini. On September 15, Google Cloud broadened its partnership with Salesforce, combining infrastructure capabilities with AI agents. A week earlier, the company also announced plans to invest €13 billion in AI infrastructure in Finland over the next two years.

In addition, more than half of Google’s available machine-learning compute capacity in 2026 is expected to be allocated to Cloud. This is strategically important because it gives Alphabet multiple avenues to monetize AI beyond its own Gemini models, including infrastructure, TPUs, Vertex AI, and enterprise services, regardless of which individual model ultimately emerges as the market leader.

CapEx remains main risk

The main risk remains the cost of this expansion. Alphabet has already raised its 2026 CapEx guidance from $180–190 billion to $195–205 billion, while management expects another significant increase in spending in 2027. Second-quarter CapEx reached $44.9 billion, while free cash flow fell to approximately -$5.9 billion as data center construction and equipment purchases continued to grow faster than cash generation.

Technical outlook: $350 is key resistance

From a technical perspective, as long as GOOGL remains above the $340–335 support zone, the setup continues to favor another attempt to break resistance near $350, which could open the way toward $360–365. As noted in Google struggles below $350 as AI investment and regulatory risks grow, a break below this support area, however, would weaken the near-term structure and could expose the stock to a deeper pullback toward $328–320, where moderate buying interest may emerge.

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