Alphabet Beats Revenue But AI Spending Worries Hit Stock — 50-Day MA Holds Key

Alphabet’s Wild Afterhours Ride — From -6% to +1.75% as Traders Change Their Minds

Alphabet’s earnings report triggered a wild swing in afterhours trading Wednesday. The stock initially dropped 6% as investors reacted to spending plans that came in way above expectations. But buyers stepped in after taking another look at the numbers, pushing the stock 1.75% higher by 22:01 GMT.

So what changed in just an hour?

Why the Selloff, Then the Comeback?

The drop was all about capital expenditures. Alphabet’s AI infrastructure spending — data centers, chips, the works — came in hotter than anyone expected. The immediate reaction was that margins would get squeezed and free cash flow could take a hit if AI revenue doesn’t start showing up fast enough.

But after things settled down, traders started reading through the rest of the report. Revenue beat expectations. Both Search and YouTube came in strong. Cloud revenue grew solidly too. Management’s commentary on AI monetization started to make more sense after the initial panic wore off.

What I think is probably the biggest reason buyers came back: some traders decided the spending increase might not be a bad thing if it keeps Alphabet ahead in the AI race. Falling behind could be worse than overspending in the short term.

Here’s Where the Chart Matters — And Why Alphabet Looks Different

Technically, we’re not seeing the kind of damage we saw in Microsoft last week or AMD earlier Wednesday, which dropped 9% after a weak forecast. And I think that’s telling. Alphabet is more than just software and chips.

The stock is just one day off a record high at $349.00. More important, it’s still holding above the 50-day moving average at $321.02. That indicator has been guiding the stock higher since it crossed to the strong side of the 200-day moving average back in July 2025.

The Bull Case: Hold the 50-Day, Push Toward $400

Here’s how I see it. Alphabet’s core business is strong enough to fund aggressive AI spending. The chart backs that up — buyers keep stepping in at the 50-day moving average. As long as that holds, the technical trend stays intact. In my opinion, if Alphabet can deliver even modest proof of AI revenue in the next quarter or two, the stock could push toward $400 or higher.

The Bear Case: Break the 50-Day, Things Get Ugly

If the 50-day moving average at $321.02 fails as support, the technical picture changes fast. Bears are already worried about spending too much without clear revenue proof. If the stock breaks below the 50-day, those concerns become the dominant narrative. The way I see it, a breakdown below $321 opens the door to a test of the 200-day moving average, and that’s when things could get messy.

What I’m Watching

The 50-day moving average at $321.02 is the line that matters most. Hold above it, and the bulls stay in control. Break below it, and the bears take over. That indicator will tell us who wins.

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