3 Reasons Alphabet Stock Could Tumble

Alphabet (GOOG) is facing threats. Even the biggest names aren’t invincible. Stocks can drop sharply without warning – wiping out months or years of gains in a matter of weeks. History shows that sudden market swings can hit any company, no matter how dominant it seems.

Alphabet’s stock has surged to new record highs, propelled by exhilarating AI momentum and robust earnings, positioning it firmly in the trillion-dollar club. However, this impressive trajectory faces headwinds from relentless regulatory battles, fierce competitive pressures in the AI arms race, and the immense capital outlays necessary for continued innovation, which together could test investor faith and make its elevated valuation increasingly vulnerable.

What Could Send The Stock Crashing?

• Regulator Scrutiny: Alphabet faces escalating antitrust lawsuits in US and EU for search/ad dominance, risking significant fines and mandated business model changes. The EU AI Act tightens AI system regulations in 2025.
• AI Search Threat: AI tools like ChatGPT are eroding Google’s search market share (below 90% globally), threatening its ad revenue model as users shift from traditional search. Apple noted declining Google search on Safari due to AI. Google’s Gemini integration aims to counter this.
• High AI CapEx: Alphabet’s 2025 CapEx of $91-93 billion for AI/cloud infrastructure creates free cash flow pressure. Crucial for growth (Cloud revenue up 32% in Q2 2025), but high spending raises return concerns amid uncertainty.

What’s The Worst That Could Happen?

When thinking about risk, it’s worth looking at how GOOG holds up in tough times. During the 2018 correction, the stock fell about 23%. The Covid pandemic hit harder, with a drop of nearly 31%. The inflation shock in 2022 was the worst, dragging GOOG down around 45%. Even for a company with solid fundamentals, these numbers show that market turmoil can trigger significant declines. Good businesses resist some pressure, but big sell-offs don’t discriminate much.

Is Risk Showing Up In The Company’s Financials Yet?

Let’s take a look at fundamentals

• Revenue Growth: null LTM and null last 3-year average.
• Cash Generation: Nearly null free cash flow margin and null operating margin LTM.
• Valuation: Alphabet stock trades at a P/E multiple of N/A

*LTM: Last Twelve Months

If you want more details, read Buy or Sell GOOG Stock.

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