Alphabet shares closed Tuesday at their lowest level since November, falling more than 3% to around $290 and landing within striking distance of the 20% decline from recent highs that traditionally defines a bear market. The Google parent has now shed roughly 17% from its February peak near $350, a retreat that reflects growing unease about where the company’s massive spending plans are headed.
The drop was the steepest single-session decline for the stock since June and came alongside broader weakness across U.S. equities. Rising bond yields and persistent geopolitical tensions have weighed on investor sentiment in recent weeks, with rate-sensitive technology stocks absorbing particular pressure as money rotates away from high-growth names. Trading volume was elevated, suggesting active repositioning rather than routine selling.
What is actually driving the selloff
Alphabet’s financial results are not the problem. Quarterly revenue rose 18% year over year to nearly $114 billion, while net income climbed 30% to approximately $34.5 billion. Full-year 2025 revenue crossed $400 billion for the first time, reaching $403 billion, with annual profit landing around $132 billion. By any conventional measure, the business is performing at an exceptional level.
The concern sitting on top of those numbers is what comes next. Alphabet has signaled that capital expenditures in 2026 could reach between $175 billion and $185 billion, nearly double the $92 billion the company invested in 2025. That spending will flow primarily into AI infrastructure including data centers, advanced computing systems, and custom chips. The strategic logic is sound. The near-term financial pressure is real.
When that kind of investment cycle collides with higher interest rates and tighter liquidity, investors tend to shift their focus from past performance to future risk. That shift is playing out in Alphabet’s share price right now.
The AI ambition behind the spending
Alphabet is not pulling back from artificial intelligence. The company recently launched Gemini 3.1 Pro through Google DeepMind, a model capable of processing text, images, audio, and video simultaneously and designed to interact with external tools. Early enterprise feedback has pointed to meaningful improvements in reasoning capability.
The company has also expanded its reach through partnerships, including a collaboration with Sea Limited to bring AI tools into platforms like Shopee and Garena across Southeast Asia, a move that intensifies its competition with Alibaba in fast-growing regional markets.
Google Cloud continues to grow rapidly on the back of enterprise AI adoption, and the $32 billion acquisition of cybersecurity firm Wiz, completed earlier this month, adds approximately $500 million in annual recurring revenue to the Cloud division. Alphabet is also allowing Wiz to remain cloud-agnostic, meaning the platform will continue serving customers on Amazon Web Services and Microsoft Azure, giving Alphabet a financial foothold inside its competitors’ ecosystems.
Where the stock stands technically
Alphabet slipped below its 50-day moving average in February and has since broken through the 100-day moving average as well, which now represents a key resistance level for any recovery attempt. Analysts have noted that a continued decline could bring the 200-day moving average near $260 into play as the next meaningful support zone.
A move below the 20% threshold from its February high would push the stock into formal bear market territory, a distinction that carries weight for institutional investors and index-focused funds that monitor such levels closely.
The question investors are sitting with
Alphabet remains one of the most structurally dominant companies in global technology, with leadership positions across digital advertising, cloud computing, AI development, and consumer platforms. Its core businesses continue to generate enormous cash flow. The long-term investment thesis has not fundamentally changed.
What has changed is the cost of executing that thesis. In a market that is growing less tolerant of expensive ambition, Alphabet’s next chapter may depend less on what it builds and more on how quickly those investments start paying back.
