Google Seems to Be Doing Something Good in the AI Race
At least, this appears to be the market’s view. For now, Alphabet’s shares have been partially spared from the heavy selling pressure that has affected other players over the past two weeks. Despite yesterday’s 2.89 percent decline, the stock is only down 4.44 percent from its highs and has been more resilient than names such as Nvidia, which is down 11.95 percent from its peak, Microsoft, down 9.11 percent, and essentially all other companies tied to the current AI frenzy.
When discussing this sector, it is important to distinguish between two primary business lines. One consists of developers of large language models, led by ChatGPT from the non listed OpenAI, as well as Google with Gemini and Anthropic with Claude. The other consists of companies building the data center infrastructure required to expand the computational capacity these models depend on. This group includes Nvidia, Amazon, AMD, Qualcomm, and once again Google.
It is clear that the real market frenzy revolves around the massive capital expenditures driving this second segment. Google alone is expected to spend 75 billion dollars on infrastructure this year, in line with Amazon and Microsoft. Meanwhile, Nvidia, whose GPUs dominate the market, continues to receive multibillion dollar orders on an almost weekly basis.
Within the data center and cloud segment, Google is performing strongly, posting 34 percent year on year growth in the third quarter of 2025. This significantly outpaces AWS, which stands at 20 percent.
On the software side, Gemini is growing 8 percent year on year, faster than ChatGPT. While ChatGPT remains the global leader, Gemini trails slightly in the United States with 27 percent versus 31 percent market share. More importantly, Google benefits from a fully integrated and widely adopted ecosystem, making it easier to embed new AI tools across its product suite.
Technical Analysis
Over the past eleven sessions, GOOG has been trading within a rectangular consolidation range, with support at 277.50 dollars and resistance at 292 dollars. The 21 day moving average, the faster one, is currently at 272.4 dollars, while the 50 day moving average is at 257 dollars. Both are steeply and positively sloped.
As with most AI related stocks, price action has experienced an almost parabolic rise from the May 2025 lows, resulting in a series of increasingly steep upward trendlines. The most recent trendline is near 265 dollars, while the two earlier ones are located at 246 dollars and near 230 dollars.
The RSI has shown a bearish divergence since early September and spent an extended period in overbought territory, reaching as high as 89. It has since retraced to 58. Trading volumes have not been extreme overall, but were notably elevated on October 30, during the session that first touched all time highs. That level was retested three more times without a breakout, underscoring its importance.
Whether AI sector valuations are overstretched or consistent with long term earnings expectations remains debated among analysts. What is certain is that the rally has been significant. Should broader profit taking emerge across the sector, even Google is unlikely to remain insulated.
In the coming days, key downside levels to monitor are 275.5 dollars, 269.5 dollars, 265 dollars, and 260 dollars. To the upside, 292 dollars remains the all time high, and a break above this level would take the stock into uncharted territory.
