Alphabet shares fell sharply Wednesday as investors responded to the Google parent’s weaker-than-expected revenue numbers and big AI spending plans.
The stock broke out from an ascending channel late last month and picked up momentum ahead of the earnings report before today’s abrupt reversal.
Investors should watch key support levels on Alphabet’s chart around $190, $180, $168, and $160, while also monitoring a key overhead area near $201.
Alphabet (GOOGL, GOOG) shares fell sharply Wednesday as weaker-than-expected cloud revenue overshadowed fourth-quarter earnings that came in ahead of analysts’ estimates.
The Google parent also said it anticipates investing about $75 billion in capital expenditures in 2025, with the lion’s share directed at expanding artificial intelligence infrastructure. That number was higher than analysts expected, highlighting investor concerns about when the spending will pay off.
The projection comes after the emergence last week of a sophisticated, cost-efficient AI model from Chinese startup DeepSeek, which put a spotlight on the significant investment U.S. tech giants have made in emerging AI technology.
Alphabet shares were down nearly 8% at around $190 in late trading. Despite today’s decline, the stock has gained 33% over the past 12 months, handily outpacing the S&P 500 during the period.
Below, we break down the technicals on Alphabet’s chart and identify important price levels worth watching.
Alphabet shares traded in a narrow seven-week ascending channel before breaking out above the pattern late last month. The price continued to gain momentum ahead of the tech giant’s quarterly report, with the relative strength index (RSI) recently crossing above the 60 threshold.
However, a day after setting a record high, the weaker-than-expected cloud results disrupted the stock’s bullish price action, setting the stage for an abrupt reversal.
Let’s identify four important support levels to watch amid the possibility for further earnings-driven selling and also point out a crucial overhead area to monitor if the stock resumes its longer-term uptrend.
Firstly, it’s worth watching how the stock’s price responds to the $190 level. This area on the chart finds a confluence of support from the ascending channel’s lower trendline and the 50-day moving average.
The bulls’ failure to defend this level could see the shares decline to around $180, a location where they may attract buying interest near the May, October, and November 2024 peaks.
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