Alphabet shares closed Friday at €293.75, a fresh 52-week high that puts the stock roughly 110 percent above its May 2025 trough. The rally, which has added nearly 17 percent in the past month alone, sets the stage for a pivotal Wednesday evening when the Google parent reports first-quarter 2026 results after the US market close. But the celebratory mood is tempered by a dual challenge: proving its massive AI investments are paying off while fending off European regulators who want to pry open Android’s core.
Analyst Optimism Tempered by High Expectations
Brian Pitz of BMO Capital has lifted his price target to $410 from $400, reaffirming a buy rating ahead of the earnings release. He points to sustained momentum in Google Cloud Platform and rising demand for Alphabet’s custom Tensor Processing Units as key catalysts. Needham and Rosenblatt maintain their targets in the $389 to $400 range, implying double-digit upside from current levels.
The analyst consensus pencils in first-quarter revenue between $107 billion and $110 billion, with earnings per share expected to land between $2.63 and $2.76. That compares with market expectations of roughly $106.9 billion in revenue and $2.68 in EPS — a slight dip from the strong year-ago figure.
The stock’s 50-day moving average sits at €265.32, roughly 11 percent below Friday’s close. That level could serve as the first technical support floor if the quarterly numbers trigger a volatile reaction.
The $185 Billion Cloud Question
Alphabet’s management has signaled plans to nearly double capital expenditures to as much as $185 billion in 2026, with the bulk earmarked for computing capacity and AI infrastructure. Depreciation charges are climbing in tandem, and some analysts are already projecting negative free cash flow for the full year.
The burden of proof falls squarely on Google Cloud. The division is expected to post growth exceeding 50 percent. A weaker showing would reignite concerns that the company is pouring money into unprofitable infrastructure. The cloud unit’s ability to monetize its hardware investments — including those custom TPUs that increasingly contribute to revenue — will be the central question when executives take questions on the earnings call.
Should investors sell immediately? Or is it worth buying Alphabet?
Alphabet has been diversifying its chip supply chain to handle the computational load. Reports suggest a partnership with Marvell Technology to develop specialized AI training chips, complementing an existing lucrative collaboration with Broadcom that was recently extended through 2031.
Brussels Targets Android’s AI Advantage
While the balance sheet commands attention, the regulatory front is heating up in Europe. The European Commission, acting under the Digital Markets Act, is pushing Alphabet to grant rival AI assistants — such as ChatGPT and Claude — the same system-level access that Google’s own Gemini enjoys on Android.
Currently, Gemini benefits from deep integrations including voice control and screen-content reading, while third-party alternatives are limited to basic app functions. A binding decision from competition authorities is expected by July. Google is pushing back against the EU’s characterization, pointing to existing licensing arrangements. The company has already been hit with nearly €9.5 billion in antitrust penalties over the years.
Market observers see this as the most significant medium-term threat to Alphabet’s ecosystem strategy, particularly as it follows an April 2025 ruling against the company’s advertising business.
The $40 Billion Anthropic Bet
Adding to the spending picture, Alphabet has confirmed a stake of up to $40 billion in AI startup Anthropic. An initial $10 billion tranche flows immediately, with the remaining $30 billion tied to milestone achievements. This commitment sits atop the broader capex plan and underscores the company’s determination to lead in artificial intelligence — even as the costs mount.
Wednesday’s after-hours report will test whether the numbers can justify the stock’s elevated valuation. A cloud growth miss or signs of even more aggressive spending could trigger immediate profit-taking. Deliver robust margins, however, and the €300 mark moves into striking distance.
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