Is Alphabet Still a Buy Despite Legal Headwinds and Overbought Signals?

Alphabet, Inc. (GOOGL) continues to dominate the tech landscape with strong financials and bullish momentum. The stock has delivered its highest quarterly growth and continues to show potential for further upside. The company’s expansion in the AI sector, combined with its strong profitability, presents a compelling investment opportunity. This article discusses Alphabet’s fundamental and technical performance to understand the stock’s next move. The price has surged to new record highs and now appears to be stabilising at elevated levels.

Alphabet Q2 2025 Earnings: Strong Revenue Growth and AI-Driven Profitability

Alphabet reported strong results in Q2 2025. Total revenue increased 14% year-over-year to $96.54 billion. The chart below illustrates the quarterly revenue trend, which shows a parabolic increase. This parabolic surge reflects solid performance across all central business units.

Google Services generated $82.5 billion in revenue, marking a 12% increase. This growth came from strong performance in Search, YouTube ads, subscriptions, and hardware. The search engine maintained double-digit growth, supported by new AI features like AI Overviews and AI Mode. Additionally, YouTube and the company’s subscription offerings also delivered solid results.

On the other hand, Google Cloud also delivered exceptional growth in Q2 2025. The quarterly revenue increased 32% to $13.6 billion. This surge came from strong demand for Google Cloud Platform, AI infrastructure, and generative AI tools. The cloud unit’s annual run-rate has now surpassed $50 billion. Alphabet plans to invest around $85 billion in capital expenditures this year to support this momentum.

Moreover, the operating income increased 14%, with an operating margin of 32.51%, as shown in the chart below. The strong cost efficiency and revenue growth maintain margin strength, although legal settlements slightly offset gains. The net income increased 19%, and earnings per share (EPS) increased 22% to $2.31.

CEO Sundar Pichai called it a “standout quarter.” He credited AI as a key driver of growth across all segments. The company’s leadership in AI and cloud continues to fuel demand and investor confidence.

Recent Catalysts and Market Drivers for Alphabet

Google’s stock price has shown strong momentum over the past years. The price reached record highs near $250 and continues to consolidate at these elevated levels, signalling the potential for another breakout. The recent consolidation coincides with renewed legal pressure.

U.S. District Judge Leonie Brinkema has begun hearings in the Department of Justice’s antitrust case targeting Google’s advertising business. The court previously ruled that Google maintained an illegal monopoly in the ad exchange and publisher server market. The trial has now entered the remedy phase. The DOJ is pushing for a forced sale of Google’s AdX platform and additional structural reforms to restore market competition. Testimonies from advertisers, publishers, and Google employees are expected to influence investor sentiment in the coming weeks.

This trial follows a recent legal victory for Google. Earlier in September, a judge blocked a forced breakup of the Chrome browser. That decision helped spark a 20% rally in Alphabet shares this month. Bullish momentum was further supported when China ended its antitrust probe, easing global regulatory pressure. These favourable developments pushed the stock above the $250 mark for the first time.

However, new policy risks have emerged. The Trump administration has proposed a $100,000 annual fee for H-1B visa holders, raising concerns across the tech sector. Alphabet issued internal travel advisories and warned of rising labour costs. Although the stock has remained stable, the proposed immigration policy could disrupt talent pipelines and put pressure on long-term margins.

Despite ongoing legal issues, investors still believe in Alphabet. The stock staying above $250 shows that the market trusts its future growth. The next few days will reveal whether this strength can continue as the antitrust trial progresses.

Alphabet Technical Analysis: Bullish Breakout Points to $300 Target

The long-term outlook for Alphabet remains strongly bullish, with the price continuing to surge. The monthly chart below shows that the stock has been trading within an ascending broadening wedge pattern since the 2020 lows near the $50.44 region. This pattern indicates intense volatility, and that volatility is currently resolving to the upside. Notably, the stock formed a bullish hammer in Q2 2025 and recorded its highest quarterly gain in Q3 2025.

The Q3 2025 candlestick suggests a sharp continuation toward the upper resistance of the broadening wedge, located in the $290-$300 range. If the price pulls back from current levels, the downside move could also be volatile due to the pattern’s structure. The target zone of $290–$300 represents a key resistance level, and any approach toward this region may trigger a significant correction.

However, the ongoing demand for AI solutions and Google’s strong fundamental performance continue to support its growth outlook over the next several years. These drivers may sustain the uptrend despite potential short-term corrections.

Alphabet’s Long-Term Parabolic Rise and Major Buy Signals

This bullish price action is further reflected in the monthly chart below, which shows a parabolic rise throughout the 21st century. The parabolic ascent in Google stock accelerated after the lows of the Great Recession at $6.15. Between 2018 and 2020, the stock formed a wedge pattern, and the post-COVID-19 bottom at $50.10 marked the beginning of a strong upward trend in Google’s price.

The chart highlights two major buy signals in the stock’s history. The first buy signal appeared between 2022 and 2023 around the $84.28 region. The second emerged near the $150 support zone during 2024 and 2025. These signals align with structural supports and mark key inflection points in the long-term uptrend.

Additionally, the monthly chart shows that Google recorded its highest-ever monthly close in September 2025. This record monthly close confirms the $150 region as a baseline support level. It also suggests that future rallies may continue to build off this strong foundation, with long-term bullish momentum intact.

Weekly Technical Setup: Inverted Head and Shoulders and Broadening Wedge Breakout

This technical bullish formation is further confirmed on the weekly chart. The chart highlights an inverted head-and-shoulders pattern that developed between 2022 and 2023. The head of this pattern formed a triple bottom around the $82.77, $84.28, and $87.97 levels. This triple bottom established a strong long-term base, with the neckline of the pattern forming near the $150 level.

The breakout above the $150 neckline confirmed the long-term reversal and positioned $150 as a key baseline support for Google’s price. Following the breakout, the stock formed a broadening wedge pattern and eventually broke above the $225 to $235 resistance zone. This breakout signalled the continuation of a strong uptrend, with the stock setting new weekly highs.

As a result, any price pullback should be viewed as a buying opportunity. A correction toward the $225 to $230 area would likely offer strong support and could serve as a high-probability entry point for long-term investors.

Alphabet Valuation vs Tech Peers: Why Google Stock Still Looks Undervalued

Alphabet has delivered the highest price return among its peers over the past five years, rising 245.12% compared to 200.36% for Meta Platforms Inc. (META), 148.02% for Microsoft Corp (MSFT), and 129.03% for Apple Inc. (AAPL). However, all of these tech stocks outperformed the S&P 500, which delivered a total return of just over 90% during the same period. This outperformance reflects sustained investor confidence, driven by Alphabet’s dominance in search, YouTube, and cloud.

Moreover, Alphabet trades at a P/E ratio of 26.89, the lowest among the four major tech peers. Apple trades at a premium with a P/E of 38.86, while Microsoft and Meta stand at 37.72 and 27.70, respectively. This discount makes Alphabet appear undervalued relative to its earnings potential, especially given its accelerating profitability, robust AI pipeline, and growing cloud revenues.

This relative valuation discount offers upside potential when combined with its top-tier growth profile. Its recent record close and expanding AI and cloud footprint support a strong forward outlook. With earnings growth outpacing peers and a lower multiple, Alphabet’s risk-reward profile looks increasingly compelling for long-term investors seeking value within the tech sector.

Regulation Risks and Overbought Signals

Alphabet faces persistent regulatory pressure, especially in the U.S. and Europe. The ongoing antitrust trial targeting its advertising business poses serious structural threats. A forced breakup of AdX or other remedies could impact revenue and market dominance. Legal uncertainties create headline risk and can trigger volatility in share price.

On the other hand, new immigration policies also pose a growing risk. The proposed H-1B visa fee would significantly raise labour costs. Alphabet depends on global talent, especially for AI and cloud innovation. Any disruption in talent flow could hinder productivity and delay critical projects.

While Alphabet trades at a discount to peers, valuation risk remains if growth slows. Investor expectations are high, and any miss in earnings or cloud adoption could pressure the stock. Moreover, the execution risk associated with scaling AI, integrating acquisitions, or managing rising capital expenditures could weigh on future margins.

From a technical perspective, the stock price has reached an extremely overbought region, signalling a potential correction before the next move higher. The weekly chart below shows that a similar overbought level was reached in June 2021, after which the price continued to rise until November 2021, marking a record high before correcting.

Final Thoughts: Is Alphabet Stock Still a Buy?

Alphabet remains one of the most compelling long-term investments in the tech sector. Its Q2 2025 results confirmed strong growth in revenue, margins, and cloud adoption. The company leads in AI innovation, while Google Cloud continues to scale rapidly. Despite mounting legal pressures, Alphabet maintains solid fundamentals and continues to inspire investor confidence. The stock has absorbed legal headlines and trades near record highs, proving its resilience.

At current levels near $255, Google still looks attractive. It trades at a discount to peers and shows strong technical momentum. While short-term corrections are possible due to overbought conditions, the long-term uptrend remains intact. The breakout from the broadening wedge pattern on the weekly chart has pushed the price to record levels. Therefore, any correction toward the wedge support at $225–$230 may offer favorable entry points for traders and investors. With accelerating earnings, expanding AI-driven growth, and a stable valuation, Alphabet remains a buy with a long-term horizon.