Google Stock GOOGL Recovers on AVGO Deal as Massive Spending Still Raises Questions

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Alphabet is rebounding as improved market sentiment and a key partnership with Broadcom offset concerns over massive investment plans.

Recovery Gains Traction After Sharp Selloff

Alphabet Inc. shares have staged a notable comeback after a difficult period in February and March, when the stock dropped roughly 31% to lows near $270. The decline came as investors grew cautious about rising costs and geopolitical uncertainty.

However, sentiment has improved in recent weeks. A broader market rebound—supported by easing geopolitical tensions—has helped lift the stock, with shares jumping 3.56% in the latest session. The recovery suggests investors are beginning to refocus on long-term growth rather than short-term risks.

Broadcom Partnership Strengthens AI Infrastructure

A major catalyst behind the rebound is Alphabet’s expanded partnership with Broadcom Inc.. The collaboration centers on developing custom chips and networking solutions to support next-generation data centers.

This agreement is expected to enhance the efficiency and scalability of Google’s tensor processing units (TPUs), reducing execution risks tied to its infrastructure expansion. It also signals strong external demand for Alphabet’s cloud ecosystem, as large-scale model developers increasingly rely on its computing capabilities.

By deepening ties with Broadcom, Alphabet is reinforcing its position in high-performance computing while building a more integrated and cost-efficient supply chain.

Technical Levels in Focus

From a chart perspective, Alphabet  slipped below its 50-day moving average (yellow) near $320 in February and the 100 SMA (green) at $300 was broken too, which opened the door for further losses toward $270.  This opened the door for further declines toward $260 where the 200 SMA stands.

GOOGL Chart Daily – The 200 SMA Held As Support

But the 200 daily SMA (red) held as support and we have seen a strong rebound in the last two weeks, sending GOOGL above $315. The moving averages have alo been broken, so the larger uptrend is back on for now.

Strong Fundamentals Overshadowed by Spending Concerns

Despite its recent volatility, Alphabet’s financial performance remains exceptionally strong. Revenue continues to grow at a robust pace, driven by its core businesses, including search and digital advertising, as well as expanding cloud services.

However, investor attention has shifted toward future spending. The company is expected to significantly increase capital expenditures, with projections ranging between $175 billion and $185 billion in 2026—nearly double the previous year’s investment.

While this aggressive expansion is aimed at securing leadership in cloud and advanced computing, it has raised concerns about near-term profitability. Higher spending could weigh on margins and free cash flow, particularly if returns take time to materialize.

Expansion Strategy Remains Aggressive

Alphabet continues to push forward with new technologies and global partnerships. Developments from its AI-focused divisions, including advanced multimodal models, highlight its ambition to remain at the forefront of innovation.

At the same time, the company is expanding into high-growth regions through strategic collaborations, strengthening its competitive position against rivals such as Alibaba Group.

These initiatives are designed to drive long-term revenue growth, even as short-term uncertainties persist.

Earnings in Focus as Market Reassesses Outlook

Investors are now turning their attention to Alphabet’s upcoming earnings report, which will provide further clarity on how effectively the company is balancing growth with rising costs.

While expectations for full-year performance remain solid, the near-term outlook hinges on whether strong revenue growth can offset the impact of heavy infrastructure investment.

For now, the combination of improving sentiment and the Broadcom Inc. partnership has helped stabilize the stock, but sustained upside will likely depend on clearer evidence that these investments are translating into profitable growth.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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