Google Stock Heads Under $300 as $180B AI Spending Surge Outweighs Record Profit
Alphabet remains financially powerful and technologically dominant, but its aggressive AI investment is testing market patience as GOOGL...
Quick overview
- Alphabet Inc. is facing market pressure as its stock struggles below $300 despite strong financial performance and record earnings.
- Investor concerns are centered around projected capital expenditures, which could nearly double to $175–185 billion in 2026, raising questions about future returns.
- The company's aggressive push into AI, including the launch of Gemini 3.1 Pro, highlights its technological leadership but does not shield it from valuation pressures.
- As Alphabet navigates a significant investment cycle, market confidence will depend on its ability to demonstrate that infrastructure spending will lead to sustainable growth.
Live GOOGL Chart
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Alphabet remains financially powerful and technologically dominant, but its aggressive AI investment cycle is testing market patience as GOOGL stock struggles to regain traction below $300.
Market Pullback Despite Strong Fundamentals
Alphabet Inc. remains one of the most profitable and strategically positioned technology companies in the world. Yet even dominant franchises are not immune to shifting investor psychology. Shares of Google fell more than 2% on Thursday, drifting back below the psychologically important $300 level as concerns mounted over the company’s future capital spending trajectory.
The decline comes despite record earnings and continued operational execution. Markets are increasingly forward-looking, and right now the focus is less on what Alphabet has earned and more on what it intends to spend.
Management’s indication that 2026 capital expenditures could reach approximately $175–185 billion has become the central issue driving negative momentum. For investors accustomed to Alphabet’s historically disciplined capital allocation, the magnitude of this projected increase represents a meaningful shift.
Technical Support Holds, but Sentiment Is Fragile
Earlier this week, Alphabet briefly dipped below $300, a level widely viewed as psychologically important. While the stock managed to rebound nearly 4% to trade around $315 shortly afterward, volatility has unsettled confidence.
The shares now sit roughly 10% below their record high of $349. The retreat mirrors broader weakness across mega-cap technology names facing similar capital intensity concerns. Companies like Amazon.com, Inc. and Microsoft Corporation have also experienced scrutiny as projected infrastructure investments climb.
The message from markets appears clear: historical earnings beats are no longer sufficient. Investors want clarity on future returns relative to the scale of planned investment.
Gemini 3.1 Pro and Alphabet’s Expanding AI Footprint
Operationally, Alphabet continues to push aggressively into artificial intelligence. The company recently introduced Gemini 3.1 Pro in preview for enterprise customers through Vertex AI and Gemini Enterprise, while also making it accessible to developers via the Gemini API.
Developed by Google DeepMind, the model is described as multimodal—capable of processing text, images, audio, and video simultaneously. Early feedback from enterprise partners has been positive, particularly around enhanced reasoning and tool-use functionality.
Beyond core AI model development, Alphabet is expanding ecosystem partnerships. A notable collaboration with Sea Limited aims to develop AI-powered tools for Shopee and Garena. The initiative includes an “agentic shopping” prototype capable of executing tasks within applications rather than simply answering queries.
Shopee’s strong position in Southeast Asia’s e-commerce ecosystem could amplify the reach of these AI integrations, especially as competition intensifies with platforms like Alibaba Group Holding Limited.
Technologically, Alphabet’s leadership remains evident. But innovation alone has not insulated the stock from valuation pressure.
Technical Levels in Focus
From a chart perspective, Alphabet has slipped below its 50-day moving average (yellow) near $320 which now represents an important near-term resistance zone. The break below it opened the door to a deeper retracement toward the psychological $300 level but the 100 daily SMA (green) is acting as support, defending the $300 zone. However, now GOOGL stock is testing the 100 SMA again after being rejected by the 50 daily SMA.
GOOGL Chart Daily – Heading Toward the 50 SMA Again
Record Financial Performance
From a purely financial standpoint, Alphabet’s recent results were impressive. Fourth-quarter revenue rose 18% year over year to nearly $114 billion. Net income increased 30% to $34.5 billion. For full-year 2025, revenue surpassed $400 billion for the first time, reaching $403 billion, while annual profit climbed to approximately $132 billion.
Advertising remains highly resilient, with Search and YouTube generating powerful cash flows. Meanwhile, Google Cloud continues benefiting from enterprise digital transformation and AI integration demand.
Under traditional valuation frameworks, these numbers would command enthusiasm. However, the narrative has shifted decisively toward forward capital commitments.
The $180 Billion Question
Alphabet’s guidance that capital expenditures could nearly double from approximately $92 billion in 2025 to as much as $175–185 billion in 2026 marked a turning point in investor sentiment.
The bulk of the investment will flow into AI-focused infrastructure: data centers, networking capacity, custom silicon, and advanced computing systems. Strategically, this aligns with Alphabet’s ambition to secure long-term leadership in enterprise AI and cloud services.
Yet the financial implications are significant. Elevated capital intensity can compress free cash flow in the near term, particularly if revenue growth does not accelerate proportionately.
Technology cycles often demand heavy upfront investment before monetization scales. However, in a macro environment characterized by higher interest rates, geopolitical uncertainty, and tighter liquidity conditions, investors are less patient with extended return timelines.
The debate is no longer about whether AI demand exists—it clearly does. The core issue is calibration: is Alphabet building infrastructure at the optimal pace relative to monetization visibility?
Execution and Macro Risks
Large-scale AI infrastructure expansion introduces complexity. Projects depend on energy availability, regulatory approvals, skilled labor, semiconductor supply chains, and geopolitical stability. Delays or cost overruns could exacerbate margin pressure.
Additionally, competitive dynamics remain fluid. Rival platforms are investing aggressively in similar AI capabilities. As competition intensifies, pricing power may gradually erode, compressing long-term margins even as usage grows.
Alphabet’s balance sheet remains exceptionally strong, providing a cushion against cyclical volatility. However, even financially resilient companies face valuation resets if markets perceive diminishing capital discipline.
A Strategic Inflection Point
Alphabet stands at a strategic inflection point. Its core businesses are robust, cash-generative, and globally dominant. AI leadership appears technologically credible and commercially promising.
But markets are recalibrating expectations. Investors want clearer evidence that unprecedented infrastructure spending will translate into durable, high-margin growth rather than prolonged free cash flow compression.
Until that clarity emerges, volatility may persist. Alphabet’s long-term trajectory remains compelling—but in the near term, confidence hinges less on earnings strength and more on disciplined execution of one of the largest AI investment cycles in corporate history.
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