Google approaches a breakout as Cloud momentum holds

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Google tests resistance as AI grows

Cloud and Search remain the core growth drivers

Fundamentally, Alphabet continues to rely on very strong Cloud momentum and the resilience of its advertising business. In the second quarter, Google Cloud revenue rose to $24.77 billion, while backlog increased to roughly $514 billion, providing strong visibility into future revenue. Search has also avoided the structural weakening that investors had feared from generative AI. According to a recent Evercore ISI survey, 78% of respondents still name Google as their primary search tool, compared with around 10% for ChatGPT. The activity gap between Gemini and ChatGPT has also narrowed significantly, gradually shifting the perception of AI from a threat to Search toward another tool for retaining users and monetizing traffic.

TPU demand adds another AI growth channel

Another driver the market is beginning to value separately is Google’s own AI infrastructure. Demand for TPUs is increasing not only internally but also among external customers, while the new Ironwood generation expands Alphabet’s ability to compete with Nvidia in AI computing. Oppenheimer estimates that TPU sales could potentially reach $170 billion by 2028, while their contribution to Google Cloud could materially accelerate segment growth. The trade-off remains the same: heavy spending on data centers and equipment is putting pressure on free cash flow, so further rerating of the stock will depend not only on AI revenue growth, but also on how quickly those investments begin to generate returns.

Regulatory pressure becomes more predictable

Regulatory risk has become clearer, although it has not disappeared. The court declined to force a breakup of Google’s advertising business, but required the company to open parts of its ad-tech infrastructure to competitors, integrate AdX and DFP more closely with Prebid and third-party platforms, expand data portability, and end preferential treatment for its own advertising tools in auctions. These requirements will remain in place for six years under external oversight. For Alphabet, this is worse than the previous status quo, but significantly less severe than a forced sale of AdX or Google Ad Manager.

For now, the market is focusing more on whether Alphabet can sustain strong Search and Cloud growth while maintaining very high CapEx. As long as GOOGL holds above $350, the technical structure, as noted in Google breaks key resistance as AI spending stays in focus, remains constructive, while a clean break above $360–365 would provide the next confirmation that the recovery is extending.

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