Alphabet's Stock Stumbles on AI Model Delay as Cloud Orders Surge and Analysts Lift Targets
Published on 07/18/2026 at 17:33 | Redaktion boerse-global.de
Alphabet’s shares ended the week in the red, dragged down by reports that its next-generation Gemini Pro 3.5 AI model faces a multi-month delay. The Google parent closed Friday at €303.60, shedding 2.02% on the day and nearly 3% over the week. Yet beneath the surface, a far more nuanced picture is emerging — one where analyst upgrades, a massive cloud backlog, and even a fresh bet from Berkshire Hathaway suggest the selloff may be overdone.
The setback stems from internal struggles at Gemini 3.5 Pro. According to a Bloomberg report, the model’s coding abilities have fallen short of benchmarks, and an updated training dataset in late June failed to deliver the hoped-for improvements. An Alphabet spokesperson confirmed that testing with partners continues and that the company is coordinating with U.S. regulators on safety issues, but a new launch date has not been set. Meanwhile, competitors are not standing still: OpenAI, Meta, and Chinese upstart Moonshot AI have all unveiled new models in recent days, intensifying the race. Moonshot’s Kimi K3 — an open-access model with 2.8 trillion parameters — is notably cheaper than U.S. alternatives, stoking fears of a price war across the AI foundation model space.
The broader tech sector has been under pressure as well. The Philadelphia Semiconductor Index entered bear territory, falling roughly one-fifth from its late-June record, while rising oil prices amid U.S.-Iran tensions added a macro layer of worry. Alphabet’s stock now sits 5.14% below its 50-day moving average, though it remains 13% below the May high of €350.75.
Wall Street remains bullish — and Berkshire is buying
Despite the Gemini delay, a clear majority of analysts maintain a positive stance. Of the 64 analysts covering Alphabet, 14 rate it a Strong Buy and 43 a Buy; only seven recommend Hold, and none advise selling. The average price target stands at around $432, with an optimistic target of $515 — implying roughly 45% upside from current levels. BMO Capital Markets recently raised its target to $455, calling Alphabet a top pick in the sector.
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Adding heft to that conviction, Berkshire Hathaway has quietly built a massive stake. The investment vehicle increased its Alphabet position from roughly 17.9 million shares in the third quarter of 2025 to 57.8 million shares in the first quarter of 2026, a move initiated by Warren Buffett and authorized by Greg Abel. For retail investors, the dip seems to be an entry point as well: market observers report a rise in small-investor holdings ahead of next week’s earnings.
Cloud growth powers the bull case
The real catalyst, however, is Alphabet’s cloud business. First-quarter cloud revenue surged more than 60% to $20 billion, and the backlog nearly doubled quarter over quarter to surpass $400 billion. Bank of America has raised its estimates, now modeling 70% cloud growth in the second quarter, driven by demand for AI solutions. For the July 22 earnings report, analysts expect earnings per share of $2.88 — up about 25% year-over-year — on revenue of roughly $117 billion. That follows a blowout first quarter where EPS of $5.11 smashed the $2.63 consensus estimate.
Even with the selloff, the stock trades at 25 times forward earnings, a level many consider reasonable given the growth trajectory. Capital expenditures, meanwhile, were raised to a range of $175 billion to $185 billion for the full year, a figure that will weigh on free cash flow but underscores management’s conviction in AI infrastructure.
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Chart support holds as options market shows caution
Technically, the longer-term uptrend remains intact. Alphabet continues to trade well above its 200-day moving average of €278.47. The short-term momentum has cooled after slipping below the 50-day average of around €320, but the structural story — dominant search, accelerating cloud, and expanding AI capabilities — remains intact. The options market has shown increased demand for downside protection, reflecting some near-term skepticism, but history suggests that after multi-week pullbacks, a rebound is not uncommon.
How convincingly Alphabet articulates its AI strategy during the earnings call on July 22 will likely determine whether the current dip becomes a buying opportunity or the start of a deeper correction. With a $462 billion cloud order book, a growing analyst consensus, and the backing of the world’s most famous investor, the bull case has plenty of ammunition.
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