Google Share Price Dips on Increased Capex Spend

Current Setup and Live Chart

The Google share price (Alphabet) is trading within a regime driven by strong demand for artificial intelligence and cloud computing, as well as expanding digital advertising spending by the company’s clients. However, investors are still assessing the impact of the strengthening U.S. dollar on the company’s bottom line.

The company retains a long-term bullish trend based on its AI product expansion, specifically its Gemini AI and Google Cloud businesses. It is also expanding its enterprise AI footprint in other areas. However, the company’s earnings are facing headwinds that stem from higher U.S. Treasury yields. The elevated Treasury yields are expected to cause a moderation of the company’s valuation. However, the company is well positioned to benefit from AI infrastructure expansion and software businesses globally, as its substantial free cash flow position supports its capex spending.

The company’s Q2 earnings report was released earlier this week, and it showed revenue of $119.8 billion and a net income of $112.1 billion. The earnings breakdown showed that Google Cloud alone brought in $24.8 billion, representing an 82% year-on-year increase. Free cash flow for the second quarter was -$5.9 billion, attributable to heavy investments in AI. Google plans to spend another $190 billion on capital projects during the fiscal year. The shares fell 2.3% after hours when the results were released.

The stock also fell an additional 1.64% in Wednesday’s session after an EU court upheld an antitrust fine of €4.1 billion against Google Class C stock. The company remains under an EU investigation over alleged violations of the Digital Markets Act. Traders view this event as ongoing regulatory risks, which have led to the ongoing sell-off. 

Macro Drivers for Google Share Price

1) AI Demand Surge

Alphabet is expanding its AI investments in response to the surge in demand for artificial intelligence products. The company is heavily invested in its Gemini AI and Google Cloud AI products and is also investing massively in AI-powered productivity tools and other AI enterprise solutions. It is also boosting its flagship Google search engine with AI enhancements. These in-house initiatives continue to strengthen the company’s long-term position in the AI market, where it now begins to challenge other traditional players for market share. 

2) Expanding Google Cloud Earnings

The company’s earnings from its cloud computing product continue to expand, as evidenced by recent earnings reports showing that Google Cloud earned more than $24 billion in the second quarter of the current fiscal year. The growth in its cloud computing business stems from robust demand for enterprise AI, cloud migration, cybersecurity, data analysis, and machine learning services. As we move forward, continued margin expansion from Google Cloud is expected to be an important macro driver for the Google share price. 

3) U.S. Treasury Yields 

The rise in U.S. Treasury yields and the stronger U.S. dollar stemming from safe-haven demand driven by the Middle East geopolitical crisis are beginning to put pressure on the company’s international revenues. Alphabet is a global technology company with a substantial revenue base located outside the United States. The rise in U.S. bond yields puts pressure on its overseas revenue growth and also creates modest FX headwinds. It can also potentially reduce the valuation of its overseas holdings. However, this macro driver is not expected to have much of an impact on global share prices due to the diversified nature of the company’s global businesses and the strong operating margins that its various business components are producing. 

Google Share Price Catalysts

1) AI Headlines: The primary Google share price catalyst remains investor sentiment toward the AI sector and AI stocks. This is a primary driver of the company’s valuation. Any new announcements or headlines around product launches or enterprise partnerships are expected to support Google share price in the near term. 

2) U.S. Treasury Yields Direction: The impact of higher U.S. Treasury yields has already been explained in the previous paragraph. When U.S. bond yields rise, they affect the valuation of technology stocks, even in the presence of strong fundamentals. When bond yields decline, it boosts the valuations of AI stocks. 

3) Demand for Cloud Computing and Digital Advertising: Headlines around enterprise spending and advertising trends of the company’s clients are an ongoing price catalyst for the stock. If demand remains strong, it is expected to reinforce earnings expectations. 

Google Share Price: Forecast Scenarios

Base case: Resilience in its cloud computing business, as well as strong AI investments and continued demand for its advertising business, are expected to lead to a bullish bias in the base case scenario. These factors are expected to override headwinds coming from a stronger U.S. dollar. 

Bull case: Robust growth in the cloud-computing business and improvements in advertising spending and trends, lower U.S. Treasury yields, and stronger AI adoption will further strengthen the Google share price. This scenario supports improved company margins and revenue forecasts and also facilitates stronger institutional buy-in. This scenario could see Alphabet outperforming the tech sector on the NASDAQ. 

Bear case: A further strengthening in the U.S. dollar, alongside rising Treasury yields and weakness in enterprise technology spending, are all factors that could compress valuation multiples and create a modest reduction in earnings expectations. This is what would trigger the bear case scenario. 

Google Share Price: Technical Outlook

The rejection from the 376.86 resistance has kept the price range-bound on the daily chart. The price is now approaching the lower boundary at 330.30. A breakdown of this price mark unlocks access to the 312.52 support and site of the 9 April 2026 low. Below this level, additional support comes in at 295.69, where the prior lows of 17 December 2025 and 17 February 2026 are found.

On the flip side, a bounce that eventually uncaps the 376.86 resistance gives the bulls clear skies to aim for a reclaim of the 409.49 resistance, the year-to-date high of May 2026. If the bulls force a break here, it extends the uptrend, with 450.78 (100% Fibonacci extension of the 10 October 2025 – 10 February 2026 upswing) expected to serve as the next bullish target