Track market-moving stories before they get noisy

Alphabet (GOOG +0.00%)(GOOGL -0.13%) reports second-quarter results after the market closes today, with the earnings call scheduled for 4:30 p.m. ET. The revenue and earnings may end up being the focus on many of the headlines. But I'd argue the number that actually has more implications for the stock sits further down the report. It's capital expenditures -- the money Alphabet is pouring into data centers and the computing infrastructure behind its artificial intelligence (AI) push.

After all, nobody doubts that the business is growing. The question is whether the company's AI spending is an investment compounding into more growth or a cost rising faster than the returns it generates.

Image source: Alphabet.

The spending curve keeps steepening In April, alongside first-quarter results, Alphabet raised its 2026 capital expenditure guidance to a range of $180 billion to $190 billion, up from $175 billion to $185 billion. Chief financial officer Anat Ashkenazi also said the company expects its 2027 capital expenditures to "significantly increase" from there.

And Alphabet spent $35.7 billion on capital expenditures during Q1 specifically. So, even to reach even the low end of its full-year range, spending would need to average about $48 billion per quarter for the rest of the year -- a step-up of more than 30% from the first quarter's pace.

To be fair, the tech company's growth has been impressive. Alphabet's first-quarter revenue rose 22% year over year to $109.9 billion, the company's 11th consecutive quarter of double-digit growth. Google Cloud revenue climbed 63% year over year to $20 billion -- an acceleration that made the segment the company's most powerful growth catalyst. And Alphabet notably said its cloud backlog swelled to more than $460 billion.

Further, Alphabet remains compute-constrained.

"We are compute constrained in the near term," CEO Sundar Pichai said in the company's first-quarter earnings call. "Our cloud revenue would have been higher if we were able to meet the demand."

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What would be reassuring -- and what wouldn't As for the earnings line, it has gotten noisy recently. Alphabet's first-quarter net income rose 81% year over year, but a $36.9 billion pre-tax gain on equity securities added $28.7 billion to the bottom line, a swing factor that has nothing to do with the operating business. That's exactly why profit is a poor scoreboard for this report, and the capital expenditure line is a better one.

So what would a reassuring report look like?

Capital expenditure guidance held at $180 billion to $190 billion, cloud growth still running near 60%, and clear evidence that the more than $460 billion cloud backlog is converting into revenue. That combination would say the spending is buying growth at a steady exchange rate.

The worrying version is the opposite. Another guidance raise stacked on top of April's, paired with decelerating cloud growth, would suggest the price of keeping up in AI is rising faster than the payoff. Investors could probably forgive either one on its own. Both together, however, could hit the stock hard.

Valuation frames the stakes. At about $347 per share, Alphabet trades at about 27 times earnings -- closer to 32 times without the first quarter's equity gains, but hardly extreme either way for a company growing revenue 22%. Shares also sit about 15% below their 52-week high of $408.61, so some caution is already priced in.

But a multiple like that still assumes Alphabet's strong growth persists as its investments pay off.

Alphabet has earned patience from investors on this front before. Google Cloud spent years absorbing investment before it became the profit driver it is now, and the company's balance sheet gives it more room for error than almost any business on Earth. The bull case, therefore, is simply that history repeats: spend heavily, wait, collect a bigger business on the other side.

Ultimately, the report lands this afternoon, and the reaction will come fast. When it does, I'll go straight past revenue and earnings to the capital expenditure line -- and I think investors should, too. If Alphabet holds the range while cloud keeps compounding, the stock's premium valuation looks earned. But if the spending number jumps again without growth to match, investors may have some cause for concern.

Reddit and a growing number of news publishers are reportedly mulling whether to cut off Google’s access to their sites as the Big Tech giant’s controversial AI search summaries siphon web traffic.

Reddit, which previously inked a $60 million per year deal which permitted Google to use its online message boards to train AI models, has grown disillusioned with the search giant’s tactics and is debating whether the agreement is worth it, the Wall Street Journal reported, citing people familiar with the matter.

USA Today, Politico, Reuters and The Economist are also reconsidering their ties to Google over its use of AI-generated “overviews” – which are placed at the top of search results instead of links to outside outlets in what critics have called an existential threat to online publishers.

Reddit is considering cutting ties despite having a content partnership with Google. SDF_QWE – stock.adobe.com

Social media community forum Reddit is considering cutting off Google’s access to the site. Amanda Alamsyah – stock.adobe.com “It’s time to take a stand and say enough is enough,” said USA Today CEO Mike Reed told the Journal.

Google search traffic from US users to USA Today plummeted by nearly half over the 12 months ending in June 2026, according to data compiled by Semrush. Traffic plunged 23% for Politico and by more than 85% for Business Insider, the report found.

USA Today – which is already suing Google for alleging operating a monopoly over digital advertising technology – is considering cutting off Google’s access to its articles for AI training. That would also mean its articles would no longer appear in search results.

Politico, which is owned by publishing giant Axel Springer, has discussed blocking Google and other bots from accessing its non-paywalled articles, according to the report. Reuters is also considering limits.

USA Today could cut off Google’s access to its articles. sharafmaksumov – stock.adobe.com “We are certainly looking at the economic trade-offs between search and AI summaries,” Reuters President Paul Bascobert told the Journal.

A Google spokesperson pushed back on the criticism, asserting that publishers are able to opt out of allowing their sites to be used for training its Gemini AI models without removing themselves from search.

“Google’s AI Search features send billions of clicks to the web every week, meeting people’s evolving preferences for how they want to find information while driving significant traffic to websites,” the spokesperson said.

Google is accused of siphoning traffic from news publishers. Koshiro K – stock.adobe.com “Our AI features highlight links to the web and help creators and publishers grow their audiences, and we offer clear controls for website owners to manage their content.”

Meanwhile, Google has turned up the heat on news publishers.

An example of AI Overview on a Google search page. Google In June, The Information reported that the company was pitching news publishers on a pilot program to have their sites featured in AI Overviews – but only if they agreed to allow sweeping access to their content for AI training.

Alphabet Inc. (NASDAQ:GOOG) shares are in the spotlight, with earnings on deck, a mixed technical setup and Edge Rankings all drawing attention.

Alphabet stock is trading near recent highs. What’s the outlook for GOOG shares? Earnings Preview & HistoryAlphabet is scheduled to report second-quarter earnings today after the market closes. Analysts estimate EPS of $2.88 along with revenue of $113.63 billion. For the prior quarter, Alphabet reported EPS of $5.11, beating the consensus estimate of $2.63. The company also posted revenue of $109.90 billion, exceeding the consensus estimate of $104.07 billion.

Alphabet has beaten EPS estimates in eight consecutive quarters. Over the last four quarters, the company has averaged an EPS surprise of 0.34% and a revenue surprise of 0.08%.

What To WatchBullish Long-Term, Bearish Short-TermFrom a trend perspective, Google is still holding the bigger uptrend: it’s trading about 8% above its 200-day SMA ($321.99) and about 1.3% above its 100-day SMA ($343.21), keeping the longer-term structure constructive. The shorter-term picture is choppier, with the stock about 1.5% below its 20-day SMA ($353.04) and about 5% below its 50-day SMA ($366.12), which is consistent with a cooling phase after the May swing high.

MACD is the cleaner momentum read right now: it’s below its signal line and the histogram is negative, which points to fading upside pressure unless buyers can push price back into the short-term moving-average band. In plain terms, MACD below the signal line often means rallies are having a harder time building follow-through.

The moving-average "map" also shows why rebounds may be work: the 20-day SMA is below the 50-day SMA (a bearish short-term crossover), even though the longer-term golden cross (50-day above 200-day) that formed in July 2025 still argues the primary trend hasn’t broken. That mix often produces range-like trading where rallies run into overhead supply and pullbacks get bought near longer-term support.

Key Resistance: $371.00 — a round-number area that also sits near the 50-day moving average zone, where rebounds can stall Key Support: $343.50 — a nearby floor that lines up closely with the 100-day SMA area, making it a logical spot for buyers to defend Benzinga Edge RankingsBelow is the Benzinga Edge scorecard for Alphabet Inc. Class C Capital Stock, highlighting its strengths and weaknesses compared to the broader market:

The Verdict: Alphabet’s Benzinga Edge signal reveals a momentum-and-growth-driven profile backed by very strong quality, but with less support from pure value. For longer-term bulls, that usually means pullbacks toward well-defined support can matter more than "cheapness," while upside follow-through often needs momentum to re-accelerate.

Alphabet Shares Trade FlatGOOG Price Action: At the time of publication, Alphabet shares are trading 0.27% higher at $347.14, according to data from Benzinga Pro.

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Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) looks compelling at $351.99, because the two-year Wall Street panic that conversational AI would cannibalize Google Search has been decisively invalidated by the numbers. For 24 months, the bear case rested on a single fear: that ChatGPT and its peers would siphon queries away from the world’s dominant ad engine. The most recent quarter shows the opposite happening in real time.

Alphabet is the parent of Google Search, YouTube, Google Cloud, Android, and Waymo. The stock has ripped 90.75% over the past year as investors reprocessed the AI threat as an AI tailwind. The question now is whether the current price already reflects that reappraisal, or whether more upside remains.

Why the AI Search Fear Just Died Q1 2026 demolished the bear thesis. Google Search & Other revenue hit $60.40 billion, up 19% year over year, with CEO Sundar Pichai confirming that “AI continues to drive search usage and queries are at an all-time high.”. Gemini-powered AI Overviews are expanding commercial ad inventory at higher click-through yields, Gemini-powered AI Overviews are expanding commercial ad inventory at higher click-through yields, with Hilton EMEA reportedly capturing one-third more clicks for one-fifth of the spend.

Google Cloud revenue grew 63% to $20.03 billion, operating margin expanded to 32.9% from 17.8%, and backlog nearly doubled quarter on quarter to over $460 billion. EPS came in at $5.11 versus $2.6327 estimated, a 94.1% beat, the fourth consecutive beat.

Why the Bears Still Have a Case Capex is the counterweight. Q1 capital expenditures more than doubled to $35.67 billion, free cash flow collapsed 46.63%, and management raised full-year 2026 capex guidance to $180 billion to $190 billion, with 2027 expected higher. Return on that infrastructure spend remains unproven quarter to quarter.

Antitrust overhang persists. Google Network revenue declined year over year, and Q1 net income was flattered by $36.91 billion in net unrealized gains on equity securities, introducing earnings volatility. Insider activity skews net selling across 181 recent insider transactions.

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Why Patience Might Still Win The Hold argument rests on entry timing. Shares are down 4.36% over the past month and sit 6% below the 52-week high of $408.37. With earnings due imminently and Polymarket assigning only a 59.5% probability of closing above $350 by month end, waiting for the print could offer a cleaner entry if capex commentary spooks the tape.

What the Numbers Actually Say Alphabet trades at $351.99 against a consensus analyst target of $433.51, implying 23.03% upside. Coverage is overwhelmingly positive with 14 Strong Buys, 43 Buys, 7 Holds, and zero Sell ratings. Valuation looks reasonable for the growth on offer: 26 trailing P/E, 25 forward P/E, with a PEG of 1.365. Year to date GOOGL is up 12.6%, while the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) has gained roughly 3.3% since the Q1 filing, meaning the stock has lagged the broad market since its blowout report.

The Verdict at $350: Why the Buyers Win At $351.99, the setup for Alphabet looks favorable. Three simultaneous engines are all accelerating. Search at 19% growth invalidates the disruption narrative that suppressed the multiple for two years. Cloud at 63% growth with a $460 billion backlog gives Alphabet a second megacap growth business generating tripled operating income. Gemini, processing 16 billion tokens per minute via API, monetizes the same AI wave the market once feared.

A forward P/E of 25 for a business compounding revenue at 22% and expanding operating margins to 36.1% is a reasonable price for buyers. The thesis breaks only if capex returns disappoint by 2027 or an antitrust remedy structurally changes distribution. Both remain absent from the current trajectory.

Watch three things quarter by quarter: Cloud operating margin, Search query growth, and capex efficiency signals. If those hold, the analyst target north of $430 becomes the floor rather than the ceiling. The fear that defined Alphabet’s discount for two years is empirically dead, and the stock has not yet fully repriced.

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Alphabet (GOOGL - Free Report) ) will officially kick off the Q2 earnings season for the Magnificent Seven when it reports its quarterly results after Wednesday's closing bell on July 22. 

As the first mega-cap technology company to report, Alphabet could set the tone not only for the tech sector, but also for the broader market heading into reports from Microsoft (MSFT - Free Report) ), Meta Platforms (META - Free Report) ), Amazon (AMZN - Free Report) ), Apple (AAPL - Free Report) ), and Nvidia (NVDA - Free Report) ) over the coming weeks.

With AI remaining Wall Street's dominant investment theme, investors will be looking beyond another likely quarter of double-digit revenue growth to determine whether Alphabet's massive infrastructure investments will generate attractive returns.

Image Source: Zacks Investment Research

Alphabet’s Q2 Expectations Remain HighWall Street expects Alphabet to post another impressive quarter, with consensus estimates calling for earnings of approximately $2.90 per share on revenue of $101.22 billion when including Traffic Acquisition Costs (TAC), which are the payments Google makes to partners for directing traffic to its search and advertising services.

The top-and bottom-line figures would represent roughly 24% year-over-year growth, respectively.

Several key business segments and underlying metrics will likely determine whether Alphabet can exceed expectations:

Google Search advertisingYouTube advertising revenueGoogle Cloud growthOperating marginsAI-related capital expenditures (CapEx)Cloud continues to be one of Alphabet's fastest-growing businesses, with demand for AI infrastructure and enterprise cloud services expected to remain robust. Based on Zacks estimates, Google Cloud revenue is expected to soar 67% to $22.79 billion from $13.62 billion a year ago.

Meanwhile, investors will be watching to see whether Gemini AI strengthens Search and improves monetization across Alphabet's product ecosystem. 

The Zacks ESPThe most intriguing reason for optimism is that the Zacks ESP (Expected Surprise Prediction) indicates Alphabet could once again surpass earnings expectations.

To that point, the Most Accurate and recent estimate among Wall Street analysts has Q2 EPS slated at $2.93 and nearly 2% above the underlying Zacks Consensus of $2.87 as shown below (Current Qtr).

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Alphabet has exceeded earnings expectations for 13 consecutive quarters with a very impressive average EPS surprise of 34.43% in its last four quarterly reports.

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Frozen v2 MomentumProviding a near-term catalyst, Alphabet shares are moving higher in Monday's trading session after reports that Google is developing a next-generation AI server chip, informally dubbed "Frozen v2," that would run its Gemini models more efficiently by embedding portions of the model's architecture directly into the silicon.

Key Features of Frozen v2

Model hardwiring: Unlike general-purpose AI chips that load models into memory, Frozen v2 would “freeze” certain aspects of Gemini’s neural-network design into the hardware, reducing the need for repeated data movement and calculations.Efficiency gains: Reports suggest Frozen v2 could serve 6-10 times more AI tokens per unit of power than Google’s latest custom Tensor Processing Units (TPUs).Specialized design: Frozen v2 will be a new line of homegrown chips, separate from TPUs, not intended to replace them.Deployment target: As early as 2028, although design details and how much model data will be hardwired are still being finalized. Why It Matters

Addressing AI capacity crunch: Alphabet is facing severe internal compute shortages, which have reportedly led to Google Cloud turning away some external customers.Cost and speed: By reducing overhead, Frozen v2 could lower energy costs and latency, making real-time AI services like voice assistants more feasible. Strategic self-reliance: This move deepens Google’s control over AI infrastructure, reducing reliance on competitors like Nvidia.Basically, Frozen v2 is a bold step toward model-specific AI hardware, aiming to make Gemini-based AI services faster, cheaper, and more scalable — but it comes with trade-offs in flexibility and model compatibility.

AI Spending Remains the Biggest QuestionPerhaps the most important aspect of Alphabet's report won't be the quarterly numbers themselves but management's outlook for AI spending.

Alphabet has dramatically increased its CapEx over the past year as it races alongside Microsoft, Amazon, and Meta to expand AI infrastructure. Investors generally remain comfortable with elevated spending as long as revenue and earnings continue growing at a healthy pace, but any indication that returns on those investments are slowing could pressure the stock.

Conversely, stronger-than-expected Cloud growth or encouraging commentary surrounding Gemini adoption could reinforce the bullish AI narrative that has driven tech stocks throughout 2026.

During Q1, Alphabet’s CapEx spiked 107% YoY to $35.7 billion, with the majority directed toward AI technical infrastructure.

Alphabet's current guidance is for approximately $175 billion-$185 billion in CapEx during FY26. The spending is primarily earmarked for expanding data centers, AI infrastructure, servers, networking equipment, and custom TPUs to support growing demand for Google Cloud and Gemini AI.

Aforementioned, investors will be looking for any updates to that outlook, as well as commentary on whether those investments are generating stronger Google Cloud growth and improving AI monetization.

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Alphabet’s Valuation Still Looks ReasonableDespite Alphabet's strong rally over the last year, its valuation remains relatively attractive compared to many other mega-cap tech stocks.

Alphabet stock currently trades at 24X forward earnings, which is near the benchmark S&P 500’s average while offering one of the strongest combinations of earnings growth, free cash flow generation, and balance-sheet strength among the Mag 7.

That reasonable valuation gives Alphabet less room for multiple contraction should earnings merely meet expectations or slightly miss them, while stronger guidance could justify additional upside if analysts continue raising profit estimates.

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Bottom LineBecause Alphabet reports before every other Mag 7 company this earnings season outside of Tesla ((TSLA - Free Report) ), its conference call may prove just as influential as its financial results.

Strong Q2 results and positive commentary would likely strengthen confidence ahead of reports from Microsoft, Meta, Amazon, and Nvidia, while disappointing guidance could weigh on sentiment across the entire technology sector.

Expectations are running high for Alphabet's Q2 results, but so is the company's earnings momentum. Optimistically, Alphabet stock currently sports a Zacks Rank #1 (Strong Buy) thanks to favorable earnings estimate revisions and a positive Earnings ESP, suggesting the company may be well positioned to deliver another quarterly beat.

Key Takeaways Alphabet's Q2 growth is expected to be led by Search advertising and Google Cloud momentum.AI Overviews, AI Mode and Gemini are boosting search activity, ad relevance and paid-click growth.Cloud demand, a $460B-plus backlog and roughly 350M paid subscriptions support revenue visibility. Alphabet’s (GOOGL - Free Report) second-quarter 2026 results, scheduled to be released on July 22, are expected to have benefited from solid momentum in Search and Cloud businesses. The momentum in Search is expected to have driven advertising revenues in the to-be-reported quarter. The Cloud business is riding on strong demand for AI infrastructure and an expanding clientele.

The Zacks Consensus Estimate for Google’s advertising revenues is currently pegged at $81.68 billion, suggesting 14.5% growth from the figure reported in the year-ago quarter. The consensus mark for Google Cloud revenues is currently pegged at $22.79 billion, indicating 67.3% growth from the figure reported in the year-ago quarter.

Alphabet has an impressive earnings surprise history. GOOGL’s earnings outpaced the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 34.43%.

Click here to know how Alphabet’s overall second-quarter 2026 results are likely to be.

GOOGL’s AI Push Aids Search & Cloud BusinessesGOOGL’s Search business is benefiting from AI infusion. Alphabet is leading the search domain with 91.27% market share, followed by Microsoft’s (MSFT - Free Report) Bing, with 4.68% share, Yahoo!’s 1.28%, Yandex’s 0.79%, DuckDuckGo’s 0.65% and Baidu’s 0.43%, per the latest data from StatCounter.

Alphabet’s Search business is expected to remain the biggest contributor to second-quarter growth. GOOGL highlighted that AI Overviews and AI Mode are increasing user engagement, with users searching more frequently and queries reaching all-time highs. Gemini’s improved understanding of longer and more complex queries is also enabling Google to serve more relevant advertisements, improving advertiser ROI and supporting paid-click growth. The Zacks Consensus Estimate for Search and other revenues is currently pegged at $63.54 billion, suggesting 17.3% growth over the figure reported in the year-ago quarter.

Meanwhile, Google Cloud is expected to have remained a major growth engine in the to-be-reported quarter. Google Cloud has solidified its position as the third-largest provider in the highly competitive cloud infrastructure market against the likes of Microsoft Azure and Amazon’s (AMZN - Free Report) Amazon Web Services. According to Synergy Research Group data, Google Cloud, along with Microsoft, is gaining market share, while Amazon continues to lead with a 28% market share in the first quarter of 2026. Alphabet and Microsoft had 21% and 14% market share, respectively.

Alphabet’s management has noted that enterprise AI solutions have become Cloud's largest growth driver, supported by strong demand for Gemini models, AI infrastructure and security offerings. In the first quarter of 2026, customer acquisition doubled year over year, large enterprise deals accelerated, and the Cloud backlog expanded to more than $460 billion, providing strong revenue visibility into coming quarters.

GOOGL Benefits from Subscription GrowthAlphabet’s subscription business is expected to have contributed meaningfully to the second quarter of 2026. The company reported its strongest-ever quarter for consumer AI plans, driven primarily by Gemini app adoption in the first quarter of 2026. Total paid subscriptions reached roughly 350 million, with Google One and YouTube remaining key contributors, providing a growing stream of recurring revenue.

YouTube is expected to have remained a solid contributor through continued strength in direct-response advertising, Shorts engagement, Connected TV viewing and subscription growth. AI-powered recommendation systems, creator matching and advertising tools are expected to have improved monetization in the to-be-reported quarter.

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Alphabet shares climbed 3% on Monday after The Information reported the company is developing a new server chip, internally dubbed "Frozen v2," designed to run Gemini models more efficiently.

The chip would permanently embed parts of Gemini's architecture directly into the silicon, reducing the number of calculations and amount of data movement required to answer queries, according to the news outlet.

Google engineers project it could serve between six and ten times more tokens per unit of power than the company's newest AI chips, called TPUs, or tensor processing units, The Information said. Frozen would become a more specialized branch of Google's custom-chip portfolio rather than replace its general-purpose TPUs.

According to the report, the company is targeting 2028 for deployment. The project is aimed at easing a major internal compute shortage that has fueled tensions and reportedly forced Google Cloud to turn away outside business.

Just last month, Google agreed to pay SpaceX nearly $1 billion a month to help bridge the gap and meet its enterprise compute commitments.

The trade-off is flexibility. The chip would work with future Gemini models only if Google sticks with the same underlying architecture, according to The Information. Google reportedly currently views Frozen v2 partly as a trial run and does not plan to produce it at the same scale as its TPUs.

Alphabet did not immediately respond to a request for comment.

Read the full story from The Information here.

Google stock chart.

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Alphabet (GOOGL 2.05%) (GOOG 2.06%) is a digital advertising juggernaut. That goes without saying. In the first quarter, it collected $77.3 billion in ad revenue, up 16% year over year and representing 70% of the company's total top line. This figure puts the business significantly ahead of its industry peer, Meta Platforms.

But Alphabet's Google Cloud division, which posted 63% year-over-year revenue growth in Q1, is the main attraction. That sales gain matters more than the company's advertising operations.

Image source: The Motley Fool.

The market is locked in on Alphabet's cloud performance Google Cloud is really hitting its stride. In addition to the robust revenue jump mentioned, this segment reported a monster 203% surge in operating income. Advertising growth metrics don't hold a candle to these figures.

The market is so focused on the overall cloud market these days. And in Alphabet's case, its shareholders are locked in on how Google Cloud performs. That's because hyperscalers are spending incredible amounts of money to build data centers to capture artificial intelligence (AI)-related demand.

Alphabet's capital expenditures (capex) will go from $91 billion in 2025 to a projected $185 billion (at the midpoint) in 2026. This money is mostly directed toward expanding the technical infrastructure to support Google Cloud.

Therefore, it's not outlandish to assume that how Alphabet's stock performs in the coming years is perhaps more tied to the cloud division than to advertising. This is now an extremely capital-intensive operation, having also raised ample external financing, evolving from the asset-light structure investors once loved. In fact, Alphabet didn't conduct any share buybacks last quarter, upending a key tenet of its capital allocation policy that had been in place for a decade.

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Alphabet faces sky-high risks and sky-high upside When it was revealed that Meta was building a cloud segment to monetize its excess computing capacity, the social media stock immediately popped 9%. That's a clear sign of just how important it is to the investment community that these big AI spenders earn a satisfactory return on invested capital sooner rather than later.

Alphabet's $185 billion in forecasted 2026 capex equates to 81% of the company's earnings before interest, taxes, depreciation, and amortization that analysts predict for the year. The capital outlays present a significant risk going forward, one that shareholders haven't had to worry about in the past.

However, the potential upside is also massive. If AI enables Google Cloud customers to create new products and services, boost revenue, and cut costs in ways that weren't possible before, which is the trillion-dollar question facing the global economy right now, then the capex might prove to be justified.

Alphabet shares currently trade at $354.46 while Wall Street’s consensus analyst price target sits at $431.72, a gap of roughly 21.8% between current price and fair value.

Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) is the parent of Google Search, YouTube, Google Cloud, Waymo, and the Gemini family of AI models. Wall Street focuses on whether Search can defend itself against generative AI and whether Google Cloud can monetize a $460 billion backlog fast enough to justify a $175 to $185 billion 2026 capex bill.

Alphabet just delivered its strongest quarter in years, yet the stock trades below where nearly every covering analyst thinks fair value sits. One outlier bull has a $515 target that would imply roughly 45% upside from here.

The Selloff That Reopened the AI Brain Drain Debate GOOGL fell 4.44% in the most recent session, closing at $354.46 after opening near $373. The trigger was a report that Google’s Gemini 3.5 Pro model is running months behind schedule, reviving concerns that top AI talent has slipped to Anthropic, OpenAI, and xAI.

Two departures fuel the narrative: Gemini co-lead Noam Shazeer returning to OpenAI after briefly rejoining Google via the Character.ai deal, and Nobel laureate John Jumper leaving DeepMind for Anthropic. Combined with increased DOJ scrutiny of search and advertising dominance and a capex outlook that cut free cash flow by 46.63% year over year in Q1 FY2026, the reaction was sharp relative to peers.

Why the $515 Target Holds Analysts maintained their targets because the underlying business accelerates. Q1 FY2026 EPS came in at $5.11 versus a $2.63 estimate, a 94.10% beat, the fourth straight quarter clearing consensus. Revenue rose 21.8% to $109.90 billion. Google Cloud grew 63% to $20.03 billion and its backlog nearly doubled quarter over quarter.

The $515 case rests on two arguments. First, Alphabet’s $2.7 billion Character.ai licensing agreement demonstrated financial and strategic flexibility to rapidly inject top-tier tech and talent back into its ecosystem. Second, the full-stack moat from custom TPUs to Gemini to distribution across Search, YouTube, and Android is difficult for departing researchers to rebuild elsewhere. Boone does not dismiss the competition. He actively tracks executive and researcher movements as a core risk to his thesis.

Of 64 covering analysts, 14 rate GOOGL Strong Buy, 43 Buy, 7 Hold, with zero Sell or Strong Sell ratings. Recent action has skewed bullish: Wedbush initiated coverage with a $671 target, the most aggressive on the Street, and BofA raised its 2026 and 2027 estimates citing an expected 70% Cloud growth print in Q2. Warren Buffett publicly confirmed he personally initiated Berkshire’s Alphabet stake, though he flagged AI capex as the primary risk to monitor.

How Microsoft, Meta, and Amazon Stack Up The mega-cap AI cohort moved in different directions. GOOGL fell 4.44% while Microsoft (NASDAQ:MSFT) rose 1.38%, and Amazon (NASDAQ:AMZN) fell 1.99%. Alphabet stood out as the loser.

Microsoft trades at $401.10 against a consensus target of $558.66, implying roughly 39% upside. Shares are down 16.69% YTD, the worst in the group. Of 57 covering analysts, 54 rate it Buy or Strong Buy, with revisions largely stable through the drawdown.

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Meta Platforms (NASDAQ:META) trades at $664.54 versus an $826.63 target, roughly 24% upside. Shares are essentially flat YTD. 57 of 63 analysts rate it Buy or Strong Buy, though a $125 to $145 billion 2026 capex guide has weighed on sentiment.

Amazon trades at $249.89 against a $314.35 target, roughly 26% upside. 62 of 66 analysts rate it Buy or Strong Buy, supported by AWS re-accelerating to 28% growth in Q1 FY2026.

The largest analyst-implied upside sits with Microsoft near 39%, ironically the peer with the worst YTD performance. GOOGL’s roughly 22% implied upside is the smallest of the four, reflecting that Alphabet has already re-rated meaningfully higher this year while peers have not.

Where the Stock Stands Now GOOGL currently trades at $354.46 against an average target of $431.72 from 64 analysts, an implied upside of roughly 21.8%. Analyst targets are one data point, not a guarantee.

Shares are up 13.39% YTD, comfortably ahead of the S&P 500’s 10.09% YTD gain, despite the recent one-day drop. Over one year, GOOGL is up 94.28% against 20.27% for the S&P 500. Trailing P/E sits at 28, forward P/E at 25, on TTM EPS of $13.09.

The Case for Alphabet at $354 The bull case rests on Cloud converting its $460 billion backlog into revenue at a pace justifying 2026’s capex, and on management buying talent faster than it loses it. Search reaccelerating to 19% growth is the fact the brain drain thesis must explain away.

The bear case argues Gemini delays are structural, DOJ remedies force meaningful business changes, or 2026 capex compresses free cash flow for longer than one or two quarters.

Consensus points to about 22% upside, fundamentals are accelerating, and the brain drain narrative has yet to show up in the numbers.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Google didn't make the cut. Grab the names FREE today.

Contact [email protected] for any questions or corrections.

Item 1 of 2 Google logo is displayed at Google's headquarters in New York City, U.S., July 1, 2026. REUTERS/Aleksandra Michalska/File Photo

[1/2]Google logo is displayed at Google's headquarters in New York City, U.S., July 1, 2026. REUTERS/Aleksandra Michalska/File Photo Purchase Licensing Rights, opens new tab

July 16 (Reuters) - Alphabet's (GOOGL.O), opens new tab Google is months behind schedule on the release of Gemini 3.5 Pro, its most powerful flagship AI model, as ​the tech giant works to improve its capabilities, particularly in ‌coding, Bloomberg News reported on Thursday.

The delay comes amid fierce competition among AI developers to boost model performance, cut costs and expand enterprise capabilities, fueling ​a steady, industrywide stream of new systems and reasoning models.

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Here are ​some details:

The model was due to be released in June, ⁠Alphabet CEO Sundar Pichai had said during Google's annual I/O developer ​conference in May.

The setback has some Google engineers, AI researchers and ​managers worried as rivals OpenAI and Anthropic release models outperforming Gemini, the report said, citing 10 current and former employees.

Google late last month updated the data ​used to train Gemini to improve those capabilities, but the results ​fell short of expectations, Bloomberg News reported.

Shares of Alphabet slipped nearly 3% following ‌the ⁠report.

"We're currently testing 3.5 Pro, an upgraded Flash model, and other models with partners, and we're productively engaged with the U.S. government," a company spokesperson told Reuters in a statement.

"We're shipping quickly across ​a wide range of ​models while ⁠keeping them highly cost-effective for customers," the spokesperson said.

OpenAI launched GPT-5.6, its most advanced model, last week ​after a delay prompted by the U.S. government's requests ​over national ⁠security concerns about the potential misuse of powerful AI tech.

Anthropic had disabled its most advanced AI models, Mythos 5 and Fable 5, for ⁠all ​users after a June 12 U.S. export ​control order citing national security concerns.

The curbs were lifted in late June after Anthropic ​added safeguards.

Reporting by Juby Babu in Mexico City; Editing by Pooja Desai

Our Standards: The Thomson Reuters Trust Principles., opens new tab

This year has marked a new chapter for Berkshire Hathaway as Greg Abel has assumed the role of CEO, succeeding Warren Buffett's more than five-decade tenure. Throughout 2026, Abel has executed a number of decisive changes in Berkshire's portfolio.

For instance, during the first quarter, Berkshire fully exited its stakes in Amazon and Domino's Pizza. Meanwhile, the company kept Apple (AAPL +1.13%) as its largest holding by a wide margin and significantly increased its position in Alphabet (GOOGL +0.12%) (GOOG 0.12%).  As of this writing (July 14), Berkshire's equity portfolio stands at $351 billion, with Apple and Alphabet together representing roughly 30% of invested capital.

While Berkshire has long avoided investments in high-growth, volatile technology stocks, the concentrated positions in Apple and Alphabet underscore an extension of Buffett's investing philosophy packaged across two leading artificial intelligence (AI) names.

Image source: The Motley Fool.

Abel has been buying Alphabet stock like there's no tomorrow Since taking the reins as CEO, Abel has moved quickly to double down on Berkshire's exposure to Alphabet. During the first quarter, Berkshire nearly tripled its existing position in Alphabet -- lifting the internet giant into the ranks of the portfolio's largest holdings. Subsequently, Berkshire further committed $10 billion through a private placement as part of Alphabet's broader $80 billion equity raise -- allocating $5 billion each to Class A and Class C shares.

These actions reflect a strong conviction in Alphabet's long-term growth prospects. Google continues to dominate search with a near-monopoly position. This moat helps the company generate predictable, high-margin advertising revenue and consistent cash flow. Moreover, Alphabet has further diversified its revenue streams across YouTube, Google Cloud Platform, and consumer electronics, providing multiple avenues for growth during any economic cycle.

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While it's not the top reason to open a position in Alphabet stock, the company also employs a modest dividend program -- adding another dimension of shareholder value while preserving the financial flexibility to reinvest in high-return opportunities, especially in the AI ecosystem.

Abel's willingness to build Berkshire's position in Alphabet so quickly may be a signal that he views the company as a wide-moat business capable of compounding earnings power over the long run. This template is consistent with Berkshire's preference for owning exceptional companies with strong competitive advantages and reliable cash-flow generation.

Image source: Getty Images.

Apple remains the king of Berkshire's portfolio Although Berkshire has been steadily trimming its position in Apple over the last couple of years, Abel has retained the iPhone maker as the portfolio's largest holding. This is interesting because Apple holds a relatively measured position in the generative AI landscape.

I think Abel's decision to continue holding Apple rests on several of the company's enduring strengths. For starters, Apple is one of the most powerful consumer brands and ecosystem moats in the world. The company's tight integration across hardware, software, and services creates meaningful switching costs and supports recurring revenue streams. As a result, Apple produces enormous profits and free cash flow, much of which is returned to investors through aggressive share repurchases.

I think one of the most underappreciated aspects of Apple is its position as a platform toll collector for AI. Developers building applications or features for iOS must navigate Apple's App Store and payment systems. This creates a durable revenue vehicle independent of which AI models are adopted.

Looking even further ahead, Apple has a meaningful optionality to expand its reach into AI-enhanced devices and services. This emerging opportunity aligns with Berkshire's affinity for businesses that are adaptable and have multiyear growth runways.

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Apple and Alphabet are attractive stocks in an otherwise frothy market What ties the positions in Apple and Alphabet under Abel's direction is a reasonable valuation profile relative to their growth potential. Apple trades at a forward price-to-earnings ratio (P/E) around 36, while Alphabet trades at a forward earnings multiple near 25. While neither is cheap per se, these premiums are justified in a broader market environment where many technology and AI-related names carry stretched valuations driven by speculative enthusiasm.

AAPL PE Ratio (Forward) data by YCharts

Both Apple and Alphabet possess durable competitive moats, exceptional cash generation, and quality management teams oriented toward long-term value creation. Abel appears to regard each company as a rare combination of business quality and valuation. In a period when froth has elevated broader indexes, the concentrated commitments to Apple and Alphabet reflect prudent capital allocation rather than momentum-driven decisions.

Alphabet Inc. (NASDAQ:GOOG) shares are in the spotlight Thursday, with earnings on deck and a notable technical setup both converging.

Alphabet shares are trending higher. What’s pushing GOOG stock higher? Earnings Expectations & HistoryAlphabet is expected to report second-quarter earnings on July 22 after market close, with analysts forecasting earnings per share of $2.88 and revenue of $113.63 billion. In the most recent quarter, Alphabet reported earnings per share of $5.11, beating estimates of $2.63 by 0.94%. Revenue came in at $109.90 billion, exceeding the estimate of $104.07 billion by 0.06%.

Alphabet has beaten EPS estimates in 8 consecutive quarters. Over the last 4 quarters, Alphabet has averaged an EPS surprise of 0.34% and a revenue surprise of 0.08%.

What To WatchGoogle Cloud is in focus after growing 63% year-over-year in Q1, faster than Azure and AWS, especially with Meta’s new cloud compute ambitions signaling fresh competition. Also key: progress on Alphabet’s custom AI chips, as the company begins selling capacity to outside cloud providers, and capital expenditure guidance, set at $180 billion to $190 billion for 2026.

A Bullish Backdrop With Short-Term WrinklesFrom a trend perspective, Alphabet remains extended above its longer-term baselines: it’s trading 16.9% above the 200-day SMA ($319.91) and 9.5% above the 100-day SMA ($341.74), which keeps the bigger-picture uptrend intact. The stock is also 5.2% above the 20-day SMA ($355.64), suggesting the recent rebound has regained some traction.

The near-term moving-average structure is a bit mixed, though: the 20-day SMA is still below the 50-day SMA (a bearish short-term crossover), even as the 50-day SMA remains above the 200-day SMA (a golden-cross backdrop that typically supports longer-term dip-buying). That combination often produces "two-speed" trading—pullbacks can be sharp, but buyers tend to show up as long as the longer averages keep rising.

For momentum, MACD is the cleaner read right now: it’s above its signal line and the histogram is positive, which points to improving momentum versus the prior downswing. In plain terms, MACD being above the signal line suggests downside pressure is easing, and the rebound is gaining follow-through.

Key Resistance: $404.50 — sitting right at the 52-week high zone ($404.47), a level that often caps rallies on the first retest Key Support: $343.50 — near a prior pivot area and close to the 100-day SMA ($341.74), a zone that can attract buyers on pullbacks Benzinga Edge RankingsBelow is the Benzinga Edge scorecard for Alphabet, highlighting its strengths and weaknesses compared to the broader market:

Alphabet Shares Edge HigherGOOG Price Action: At the time of publication, Alphabet shares are trading 0.74% higher at $372.94, according to data from Benzinga Pro.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Key Takeaways Alphabet's AI-led growth across Search and Cloud supports its premium valuation despite elevated spending.Alphabet plans $180B-$190B in 2026 capex, with AI infrastructure spending pressuring free cash flow.Alphabet's Cloud backlog topped $460B as 75% of customers used its AI products, signaling strong demand. Alphabet (GOOGL - Free Report) shares are overvalued, as suggested by a Value Score of D. The GOOGL stock is trading at a forward 12-month price/earnings (P/E) of 24.61X, a premium compared with the Zacks Internet Services industry’s 23.71X and broader Zacks Computer & Technology sector’s 24.27X.

Alphabet shares are trading at a premium compared with Microsoft (MSFT - Free Report) , shares of which are trading at a P/E multiple of 19.82. However, GOOGL shares are trading at a lower multiple compared with Apple’s (AAPL - Free Report) 33.51 and Amazon’s (AMZN - Free Report) 25.98.

GOOGL Stock’s Valuation
Image Source: Zacks Investment Research

Is Alphabet worth buying at current prices? Let’s dig deep to find out.

GOOGL Up a Modest 15% YTD: What’s Plaguing the Stock?Alphabet shares have risen a modest 14.8% year to date (YTD), slightly better than the broader sector’s return of 14.6% and the industry’s 10.5%. GOOGL’s huge capital expenditure — between $180 billion and $190 billion — roughly double 2025’s level, with spending expected to rise further in 2027, has spooked investors. Alphabet nearly doubled first-quarter 2026 capital expenditure to $35.7 billion, with most spending directed toward AI infrastructure, including servers, data centers and networking equipment. The investment materially reduced quarterly free cash flow and has raised concerns that elevated AI spending could persist for several years.

GOOGL Stock’s Price Performance
Image Source: Zacks Investment Research

Alphabet’s prospects are suffering from stiff competition from the likes of Microsoft-backed OpenAI, Amazon, Anthropic and Meta across foundation models, enterprise AI, cloud infrastructure and AI assistants. The company’s heavy investments in talent hiring, GPUs, TPUs and model development are expected to keep margins under. Alphabet has also highlighted higher research & development as well as marketing expenses driven by AI investments and Gemini adoption, in this regard.

Alphabet is facing stiff competition in the cloud computing space from Microsoft and Amazon. According to Synergy Research Group’s first-quarter 2026 data, Amazon maintained a strong lead in the market, though Microsoft and Alphabet’s Google continued to achieve substantially higher growth rates. Amazon, Microsoft and Alphabet’s market share were roughly 28%, 21% and 14%, respectively. In the search domain, Google continues to dominate with a roughly 91.27% share, followed by Microsoft’s Bing, with a 4.68% share, per the latest data from StatCounter. In the consumer technology market, Alphabet faces stiff competition from Apple.

GOOGL’s search monetization policy has been put under scrutiny by investors. Although AI Overviews and AI Mode are boosting user engagement and search queries reached all-time highs, investors remain cautious about whether conversational AI can ultimately generate advertising revenues comparable to traditional search. Alphabet is still testing new AI-native advertising formats, leaving long-term monetization questions unresolved.

AI Push Boosts GOOGL’s Search & Cloud BusinessAlphabet’s prospects are increasingly driven by AI, which is no longer a standalone initiative. AI is becoming the core growth engine across Search, Cloud, subscriptions, advertising, and emerging businesses. AI-powered features are being embedded across Search, YouTube, Chrome, Workspace and Google One subscriptions. First-party models now process more than 16 billion tokens per minute, paid subscriptions reached about 350 million, and Gemini adoption continues expanding across Search, Workspace, Chrome and consumer AI offerings.

Alphabet sees AI as creating an “expansionary moment” for Search rather than disrupting it. Management noted that AI-powered features are increasing engagement and driving search queries to all-time highs, similar to the growth acceleration created by the transition to mobile. Alphabet has also reduced AI response costs by more than 30% since upgrading to Gemini 3, improving future economics. AI also improves advertising effectiveness through a better understanding of user intent, allowing GOOGL to monetize longer and more complex searches while improving advertiser ROI.

Google Cloud is one of the clearest beneficiaries of AI adoption. Management emphasized that Enterprise AI Solutions have become the Cloud’s primary growth driver, with 75% of Cloud customers now using Google’s AI products. Cloud backlog nearly doubled sequentially to more than $460 billion in the first quarter of 2026, reflecting exceptional enterprise AI demand and providing significant revenue visibility. Alphabet’s ability to provide infrastructure, models, security and productivity tools through a single integrated platform positions Google Cloud to capture growing enterprise AI spending.

Strong enterprise adoption of AI bodes well for GOOGL’s prospects. In the first quarter of 2026, Gemini Enterprise’s paid monthly active users grew 40% sequentially, enterprise AI products grew nearly 800% year over year, customer acquisition doubled, and Google signed multiple $1 billion-plus AI deals. This suggests AI is evolving into a meaningful recurring enterprise software business for Alphabet.

2026 Earnings Estimate Revisions Positive for GOOGL StockThe Zacks Consensus Estimate for 2026 earnings is pegged at $14.32 per share, up by a couple of cents over the past 30 days, indicating 32.47% growth from the figure reported in 2025. The consensus mark for 2026 revenues is pegged at $423.63 billion, indicating 23.54% year-over-year growth.
 

The consensus mark for second-quarter 2026 earnings is pegged at $2.86 per share, unchanged over the past 30 days, suggesting 23.81% year-over-year growth. The Zacks Consensus Estimate for second-quarter 2026 revenues is pegged at $101.22 billion, implying 23.86% year-over-year growth.

Here’s Why GOOGL Stock is a Buy Right NowAlphabet’s long-term investment case remains compelling and justifies a premium valuation. The company continues to strengthen its leadership across Search, Cloud and digital advertising while rapidly transforming AI into a powerful growth engine spanning consumer and enterprise markets. Surging Cloud backlog, accelerating Gemini adoption, improving AI economics and positive earnings estimate revisions underscore the strength of its execution. As AI investments increasingly translate into higher revenue, deeper customer engagement and expanding monetization opportunities, Alphabet appears well-positioned to deliver sustained growth.

Alphabet currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Google said it has made its largest solar power and battery storage purchase to date. The first two phases of the project, located in Arkansas, will generate enough electricity to power about 6% of the state’s peak demand, the company said earlier this week.

Electricity from the project will flow directly to the grid, offsetting demand from Google’s data centers. Google is both investing in the project alongside developer Cypress Creek Energy and purchasing the entire output of the first two phases, adding 1 gigawatt of solar capacity and 1.9 gigawatt-hours of battery storage to its portfolio.

When completed, the three-phase project will be the largest solar facility in the United States, the companies said. The third and final phase of the project is scheduled to connect to the grid in 2029, bringing the power plant’s total capacity to about 1.8 gigawatts of solar and 2.9 gigawatt-hours of battery storage. Cypress Creek has secured $3.5 billion in financing to support the first two phases.

The Steel River Energy Center, as the project is called, will be located about 30 miles north of Memphis, Tennessee. By pairing solar panels with large batteries, the power plant will be able to provide power to the grid all day, every day. It will also help Google in its quest to match its electricity use with clean power on an hourly basis, a stringent measure that should help bring more hybrid power plants to the grid.

Google’s decision to invest in a large solar and battery facility stands in contrast to xAI, which operates an unpermitted natural gas power plant about 40 miles to the south. 

Elon Musk has invested heavily in natural gas to power xAI’s Colossus data centers, despite running Tesla, which makes solar panels and grid-scale batteries. XAI is running nearly 60 natural gas turbines without federal clean air permits, according to a report from Reuters. Pollution from xAI’s power plant in Mississippi is affecting predominantly Black neighborhoods, Reuters found.

Musk is unlikely to change course. He recently purchased APR Energy, a project developer that specializes in modular natural gas power plants.

Google has also invested in natural gas, working with Crusoe to build a 933-megawatt power plant in West Texas, though that project has been something of an anomaly for the company, which has mostly relied on clean power to expand its portfolio. Given the speed with which projects like Steel River can be deployed — nearly 2 gigawatts of solar capacity in three years — it’s likely that Google will continue to invest in renewables and batteries.

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Tim De Chant is a senior climate reporter at TechCrunch. He has written for a wide range of publications, including Wired magazine, the Chicago Tribune, Ars Technica, The Wire China, and NOVA Next, where he was founding editor.

De Chant is also a lecturer in MIT’s Graduate Program in Science Writing, and he was awarded a Knight Science Journalism Fellowship at MIT in 2018, during which time he studied climate technologies and explored new business models for journalism. He received his PhD in environmental science, policy, and management from the University of California, Berkeley, and his BA degree in environmental studies, English, and biology from St. Olaf College.

You can contact or verify outreach from Tim by emailing [email protected].

A specially designed Google logo, during the opening of Google's new Artificial Intelligence (AI) centre in Berlin, Germany, March 5, 2026. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights, opens new tab

CompaniesLUXEMBOURG, July 15 (Reuters) - Alphabet (GOOGL.O), opens new tab unit Google on Wednesday urged Europe's top court to dismiss EU antitrust regulators' appeal against a lower court ​ruling that scrapped a €1.49 billion ($1.7 billion) fine, saying the regulators' ‌arguments were flawed.

The dispute reached the Court of Justice of the European Union after regulators appealed a 2024 General Court ruling that annulled the fine imposed on Google in 2019. ​The lower court cited errors in the European Commission's assessment of ​the case.

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The Commission, the EU's competition watchdog, said Google used ⁠restrictive clauses in contracts with publishers that prevented rivals from placing search ​advertisements on the publishers' websites, reinforcing Google's dominance in online search advertising.

The ​Commission said the practices ran from 2006 to 2016. Google, whose AdSense platform provides search advertising, removed the contested clauses from publisher agreements in 2016.

Google's lawyer, Josh Holmes, rejected ​the Commission's arguments.

"The Commission's new arguments are flawed. The General Court's reasons ​are clear and complete," he told the panel of five judges.

Holmes said the Commission had ‌ignored ⁠evidence showing Google's rivals had substantial opportunities to compete.

Commission lawyer Anthony Dawes criticised the lower court's ruling, saying it imposed an unprecedented obligation on regulators to analyse issues already settled by case law.

"This finding turns case law ​on its head," he ​said, adding that ⁠the lower court's reasoning would effectively treat exclusive clauses as lawful by default.

A court adviser is due to ​issue a non-binding opinion on November 12, with a final ​ruling expected ⁠in the following months.

The AdSense fine was one of four EU antitrust penalties that have cost Google €9.5 billion during its nearly two-decade dispute with the ⁠Commission. The ​lower court's decision to annul the fine ​marked a rare legal setback for the EU watchdog.

The case is C-826/24 P Commission v Google ​and Alphabet (Google AdSense)

($1 = 0.8771 euros)

Reporting by Foo Yun Chee. Editing by Mark Potter

Our Standards: The Thomson Reuters Trust Principles., opens new tab

An agenda-setting and market-moving journalist, Foo Yun Chee is a 21-year veteran at Reuters. Her stories on high profile mergers have pushed up the European telecoms index, lifted companies' shares and helped investors decide on their next move. Her knowledge and experience of European antitrust laws and developments helped her break stories on Microsoft, Google, Amazon, Meta and Apple, numerous market-moving mergers and antitrust investigations. She has previously reported on Greek politics and companies, when Greece's entry into the eurozone meant it punched above its weight on the international stage, as well as on Dutch corporate giants and the quirks of Dutch society and culture that never fail to charm readers.

A group of publishers and authors have filed a class action lawsuit against Google, accusing the tech giant of using their copyrighted works to train its AI platform, Gemini.

The group of plaintiffs, which includes Hachette, Cengage, Elsevier, author Scott Turow, and S.C.R.I.B.E., also alleges that Google intentionally removed or changed copyright information on these works to “conceal… that its Gemini Models were trained on stolen materials,” according to the lawsuit.

This lawsuit is just one of many complaints that publishers, authors, and other copyright holders have filed against AI companies such as Google, Meta, OpenAI, and Anthropic.

While many of these lawsuits are still pending, two early court decisions in California have favored the AI companies, ruling that the use of copyrighted works for AI training is considered “fair use” under U.S. copyright law that has not been updated since before the existence of the internet.

Anthropic was, however, fined $1.5 billion for pirating the works it trained on, marking the largest payout in the history of U.S. copyright law. Around half a million writers were eligible for payments of at least $3,000. However, many authors opted out of receiving the settlement so that they could pursue further legal action over AI training.

The California judges’ decisions don’t bode well for how other courts may view the tech companies’ fair use defense, but the conflict is too nuanced for these rulings to establish an inarguable precedent. The lawsuit against Google was filed in the U.S. District Court for the Southern District of New York, giving a different judge the opportunity to weigh in.

In the Google case, the publishers have a more nuanced, long-term relationship with the company. The lawsuit explains that publishers and authors have a long history of providing Google with copyrighted works for the specific purpose of making books searchable through Google Books. These search results do not allow users to view entire books. Instead, they provide access to short snippets of the book along with bibliographic information. The plaintiffs claim that Google trained Gemini on copies of these books, as well as books uploaded to the Google Play store, even though it never received permission to do so.

“Google illegally copied works from all these scope-limited programs for AI training, knowing it lacked authorization to do so,” the lawsuit reads.

The plaintiffs also cite an internal document from Google that allegedly states that using copyrighted books for AI training could be “highly problematic for Google” and might result in “$10Bs-$100Bs in potential fines.”

Google did not immediately respond to a request for comment.

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Amanda Silberling is a senior writer at TechCrunch covering the intersection of technology and culture. She has also written for publications like Polygon, MTV, the Kenyon Review, NPR, and Business Insider. She is the co-host of Wow If True, a podcast about internet culture, with science fiction author Isabel J. Kim. Prior to joining TechCrunch, she worked as a grassroots organizer, museum educator, and film festival coordinator. She holds a B.A. in English from the University of Pennsylvania and served as a Princeton in Asia Fellow in Laos.

You can contact or verify outreach from Amanda by emailing [email protected] or via encrypted message at @amanda.100 on Signal.

A specially designed Google logo, during the opening of Google's new Artificial Intelligence (AI) centre in Berlin, Germany, March 5, 2026. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights, opens new tab

CompaniesBERLIN, July 14 (Reuters) - Germany's media regulator said on Tuesday that Google's AI Overviews and Perplexity AI are subject to the country's media laws, stepping ​up scrutiny of AI-generated content after a German court found Google liable ‌for inaccurate information produced by the feature.

The Commission for Licensing and Supervision, ZAK, which represents Germany's 14 state media authorities, said AI-generated news summaries and chatbot responses constitute content created by the providers ​themselves rather than merely displaying third-party material.

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The ruling follows increased scrutiny of ​AI-generated search summaries in Germany and elsewhere in Europe.

In a separate case, a ⁠court in Munich held that Google could be directly liable for allegedly false statements ​generated by its AI Overview feature, finding that AI-produced summaries amounted to the company's ​own content rather than a mere display of third-party information, according to German newspaper publishers' association BDZV.

"AI search engines and chatbots are content providers, and we will consistently apply German media law to them ​from now on," ZAK Chairman Thorsten Schmiege said in a statement.

The regulator said the ​liability exemption under the European Union's Digital Services Act, which generally shields platforms from responsibility for ‌illegal user-generated ⁠content, did not apply in these cases.

According to the regulator, Google's AI Overviews are displayed prominently within search results, making traditional lists of links less visible and thereby unfairly disadvantaging third-party media content.

It also argued that chatbots such as Perplexity influence the discoverability of ​news content when they ​select and present ⁠sources, links or recommendations alongside AI-generated answers.

Such services could therefore qualify as media intermediaries and be subject to rules designed to safeguard ​media plurality.

Google said it planned to appeal the decision, which a ​spokesperson said "fails ⁠to recognise how people's preferences when searching for information and the information ecosystem are changing."

"Our AI-powered summaries enhance the search experience in Germany - they help users discover new content and ⁠ask ​follow-up questions," the spokesperson said.

Perplexity declined to comment on ​the decision but said it complies with the EU's privacy rules, or GDPR, and holds SOC 2 Type ​II security and privacy certification.

Reporting by Klaus Lauer, Writing by Friederike Heine, Editing by Louise Heavens

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Google maintained steady user and traffic growth in June while rivals Claude and Gemini extended sharp gains, according to a new note from Bank of America.

BofA reiterated its Buy rating on Alphabet Inc (NASDAQ:GOOG), pointing to comments from Google executives describing an "expansionary moment" for Search that could support continued strength into 2026.

Global daily active users on Google's app rose 1% month-over-month to 2.2 billion in June, per Sensor Tower data cited in the note. ChatGPT held flat at 440 million daily users, while Gemini climbed 7% to 118 million and Claude gained 9% to 18 million.

Gemini added 8 million daily users during the month, more than any other AI app tracked, followed by ChatGPT and Claude, which each added 2 million. Meta AI lost about 200,000 daily users over the same period.

Web traffic data from Similarweb showed a similar pattern. Global daily visits to Google were up 4% year-over-year to 2.8 billion in June, while ChatGPT's web traffic was flat year-over-year at 179 million visits. Gemini's web visits surged 341% year-over-year and Claude's rose 736%, though both remain far smaller in absolute terms than Google or ChatGPT. Meta AI's web visits rose 98% year-over-year.

In the US specifically, Google web visits rose 3% year-over-year to 535 million, while ChatGPT's US visits climbed 19% year-over-year to 31 million, equivalent to roughly 6% of Google's US traffic.

Search market share data from Statcounter showed Google's global share up 79 basis points month-over-month and 171 basis points year-over-year, reaching 91.3%. Bing's global share ticked up 30 basis points month-over-month to 4.7%. In the US, Google's search share rose 86 basis points month-over-month to 86.7%.

BofA said the combination of stable Google traffic and strong ecommerce volumes in the second quarter points to potential upside to Street estimates for Search. The bank flagged new AI-driven ad formats and agentic search features announced at Google's I/O conference, along with broader rollout of Gemini 3.5 Pro, as potential catalysts. Risks cited included Alphabet's relatively elevated valuation compared with its recent history, OpenAI's advertising ramp, and emerging competition from new models.

When Mark Zuckerberg walked into a Los Angeles courtroom on 18 February flanked by an entourage bedecked in Meta Ray-Bans, some people laughed. If this was an attempt at product placement for the company’s newest range of smart glasses, it was jarringly ill-judged: Zuckerberg was about to testify before a jury in a landmark lawsuit that sought to prove that Instagram and YouTube are addictive by design, and he had passed a throng of bereaved parents on his way into the courthouse. But the prosecution team, led by Mark Lanier, were not laughing.

This was a serious trial. For the first time, the most powerful names in social media were being held to account for the inherent design of their platforms, rather than the content hosted on them. They were accused of deliberately and maliciously building products that keep children hooked, with disastrous consequences for the mental wellbeing of young people. It was a landmark case – a big tobacco moment for big tech.

But there were specific reasons why the prosecution was deeply disturbed to see Meta Ray-Bans in court. “We had fought hard for an anonymous jury. We didn’t want the names disclosed in a way where Google could go pull up their Gmails, where Meta could go pull up their Facebook accounts,” Lanier tells me in his warm Texas drawl. “Then Zuckerberg shows up with security guards wearing Meta glasses. They can easily do facial identification and figure out exactly who the jurors are.” This was not product placement, Lanier says – it was the deployment of the most relentless form of digital surveillance the world has ever known.

The prosecution appealed to the judge, pointing out that Zuckerberg’s entourage was breaking rules that forbade cameras in the courtroom. “The judge made them swear that they hadn’t taken any pictures.” Lanier says. “And then they took the glasses off.”

The case of KGM v Meta et al was always going to be as hi-tech as it was high stakes. KGM – also known by her first name, Kaley – claimed that an addiction to social media that had begun with YouTube at age six and Instagram at age nine had caused her to develop body dysmorphia, anxiety and depression. (Snapchat and TikTok, named in Kaley’s original complaint, had settled out of court for an undisclosed sum before the trial began.) Lanier’s team had to convince the jury that Meta and Google had engineered their products to be addictive. It was a test case that could blaze a trail for thousands more to come.

“I’d never been in court before,” Kaley, now 20, tells me in her first newspaper interview. “Seeing all those people, and having all their eyes on me, was very overwhelming.”

Mark Zuckerberg arrives at the Los Angeles court with two members of his entourage, who are wearing Meta glasses. Photograph: Jill Connelly/Getty ImagesLanier knew this was a case like no other – and that his opponents were prepared to use every power at their disposal to win it, including artificial intelligence. Google and Meta have their own AIs: Gemini and Meta AI, respectively. Lanier was determined to beat them at their own game. (A self-described “AI zealot”, his firm employs a team of five whose sole responsibility is to produce a weekly report for him on advances in AI over the previous seven days.) Lanier asked a company called BoodleBox to make him a bespoke AI incorporating a combination of Gemini, Claude, ChatGPT and other existing models. He used it in “30 different ways” for Kaley’s case, he says, but when he tells me about just one of them, my jaw drops.

The jury might have been anonymous, but the legal teams were able to gather a significant amount of data about each member during jury selection, Lanier explains. “We have questionnaires they filled out that tell us their age, their gender, their occupational history, their family status. But it gives us more insight: it asks, who are three people you most admire and why? Who are three you least admire and why? How do you feel about this or that on a scale of one to 10?” Armed with a dossier of information, Lanier’s AI created models of every juror, “a demographic and psychological exemplar” of each one that allowed him to try out potential arguments on individual members. At the end of each day in court, he would feed the transcripts to his AI shadow jury and ask questions. What did juror number 11 think of the witness? What did juror number seven think was important? Where did juror number three get confused? “Pretty cool,” he grins.

AI can be used for good or abused for evil, Lanier says – just like litigation, which he has been practising for 42 years, or religious faith, which guides everything he does. A devout Christian, Lanier believes he is on a divine mission to take on companies that enrich themselves by exploiting the vulnerable.

“The opposing side had unlimited resources. They had dozens of lawyers in the courtroom. To call it a David versus Goliath storyline is maybe giving too much credit to David, but it’s the best descriptor I can give,” he says; the disparity between him and his opponents was even larger than the biggest mismatch in biblical history. “This was a righteous case, without a doubt. It was a holy war.”

Lanier with his daughters Rachel (on left) and Sarah (right), who worked with him on the case, on the steps of the courthouse. Photograph: Ted Soqui/EPA/ShutterstockOn 25 March, when the (real, human) jury returned its verdict, Lanier stood on the steps of the courthouse alongside two of his five children – daughters Sarah and Rachel, who worked with him on the case – and hailed “a righteous moment”. The jury had found Google and Meta liable on all counts and had awarded Kaley $6m: $3m in compensatory damages and an extra $3m in punitive damages, because Meta and Google were found to have “acted with malice, oppression or fraud”. Meta will shoulder 70% of the bill, with Google picking up the rest. But these damages are only the beginning: more than 2,000 similar lawsuits are now being brought against social media companies, accused of harming the mental health of children with products that are addictive by design, using the legal route Lanier proved viable in Kaley’s case.

Ever since they stood behind Trump at his second inauguration, the power of the tech titans has seemed ever more unassailable. (Lanier tells me big tech now hires one lobbyist for every six members of the 441-strong US House of Representatives.) But Kaley’s legal victory is a reckoning – one that could threaten the entire social media business model.

“Politicians will never hold these people accountable. The only thing they fear is a jury,” Lanier says. “I get 12 ordinary people, and they’re empowered. And when they hear that evidence and they take their oath seriously – bam! – they can do something.”

I meet Lanier in Yarnton Manor, a grade II-listed estate in Oxfordshire, built in 1611 by Sir Thomas Spencer, a distant ancestor of Diana, Princess of Wales. He lounges on a teal sofa in one of the wood-panelled rooms, sometimes with a leg dangling over the sofa’s arm, sometimes hugging one of the velvet cushions, often leaning forward to gesticulate in animated ­excitement as he shares a biblical reference or damning piece of trial evidence. It’s a swelteringly hot day in late May, and Lanier, 65, flew in from Houston yesterday, but he looks fresh as a daisy. He only needs four hours’ sleep a night. “Sleep’s a bonus, but not one that’s necessary.”

Lanier’s charitable foundation bought Yarnton in 2021 and turned it into a centre for religious study. He preaches in a Baptist church every Sunday; he has another study centre in Houston. “In the US at least, Christian faith has a bad reputation of being vibrant only among uneducated, unenlightened, bigoted, narrow-minded people. Those of us who hold on to a faith are responsible for trying to bring out the good that can come from it – not the holier-than-thou stuff that seeds division,” he says. “I’m a lawyer who has funded all of this by trying to grab hold of people whose conduct has been destructive.” He draws a rectangle in the air above his head, tracing the corners of the ornate coved ceiling. “It was the Johnson & Johnson case that bought this,” he grins. “My wife and I call this the J&J Manor House.”

Before he took on Google and Meta, Lanier was involved in some of the most high-profile landmark litigation cases in the history of big pharma. In 2018, he won $4.69bn (reduced on appeal to $2.12bn) for 22 women with ovarian cancer and their families after Johnson & Johnson failed to warn them of the carcinogenic risk associated with the talc in their Baby Powder. Natural talc is often mined within close proximity of carcinogenic asbestos; Lanier argued that Johnson & Johnson had known this for decades without warning the public. (Johnson & Johnson said in 2018: “J&J’s baby powder is safe and does not cause cancer. Studies of tens of thousands of women and thousands of men show that talc does not cause cancer or asbestos-related disease.”) In 2019, he won an 11th-hour $260m settlement from opioid manufacturers and distributors on the eve of what would have been the first federal trial in the history of the opioid epidemic.

Lanier’s “bread and butter”, he says, involves ubiquitous, household-name products that can cause serious harms, which the companies behind them know about but choose not to act on. “Normally, I want an eye-popping verdict that causes Wall Street to recoil and causes in-house lawyers to lose their jobs and companies to respond differently,” Lanier told a podcast recently.

When he began his career, at a big Houston law firm, he just liked winning. He learned the psychological skills and rhetorical techniques that helped him excel in court: how to make things memorable, how to read a room and change the energy in it, “how to make word choices that will trigger visceral reactions, how to use story to bypass people’s natural defences”. But after five years of straight wins, he lost – in a case where he knew his client was in the wrong. Licking his wounds on the drive home, he had an epiphany. “I thought, what am I doing? Did I almost take my gifts, my talents, my skills and wield an injustice?” Aged 29, Lanier started his own firm so he could pick what he considered to be “righteous” cases. “You can do horrible things with this power, or you can do good.”

Lanier estimates that settlements from drug companies following his landmark opioid litigation are now in excess of $10bn. His victory in the Johnson & Johnson case opened the floodgates to tens of thousands of claims from people with cancer and their families – including one currently in the high court of England and Wales, with more than 7,000 claimants. J&J deny the allegations.

In the wake of Kaley’s win against Google and Meta, the former Facebook employee turned whistleblower Frances Haugen claimed that Meta could be on the hook for $1tn in future damages from tens of thousands of people who have been harmed by the use of their platforms as children. This might be an overestimation, Lanier says. “But tens of billions, easy. Part of it also is: are they willing to make real change? Reasonable change is something that a lot of us would put a high value on.”

At the time of the Johnson & Johnson verdict, Lanier remarked that suing in an initial test case with only a small cluster of plaintiffs allowed him to maximise the emotional impact of claimants’ stories on the jury. “It’s easier to get justice in small groups,” he said. “In small groups, people have names, but in large groups, they’re numbers.”

Kaley was a lone plaintiff, and a reluctant trailblazer. It was her mother who brought her case to the attention of lawyers. (Kaley was identified only as KGM in court because the alleged harms took place when she was a child.)

“I was really scared,” Kaley tells me in a video call; she has chosen to keep her camera switched off. “I had a lot of anxiety around the thought of them deleting my accounts as a punishment. And that did end up happening, at least with Snapchat.”

There’s a duality to the way Kaley speaks: giving evidence in the trial has prepared her to be able to answer difficult questions about the most challenging parts of her life, and that, combined with her low voice, can make her sound older than her 20 years. But her responses are often brief and staccato, and she sometimes struggles to find the right words, like a teenager.

Brought up by a single mother in Chico, California, along with an older brother and sister, Kaley grew up with learning disabilities, in a household without much disposable income. By the time she was nine, she had uploaded hundreds of videos to YouTube, and soon had dozens of accounts on both YouTube and Instagram. “I liked that I could post my own stuff and see how many likes I got. I liked being able to see what my friends were up to.” When Kaley wasn’t posting, she was scrolling. She stopped engaging with her family. She no longer left her home. Once, she spent more than 16 hours on Instagram in a single day.

“I was on it every day from the moment I woke up to the moment I went to bed. I was on my phone during class – I would get in trouble, I got bad grades because I was not paying attention.” She was terrified at the thought of anything happening to her phone. “If I was walking next to a lake or something, I’d be so scared that I was going to drop my phone and lose my social media.”

Her mother tried to intervene, activating screen time limits or confiscating Kaley’s phone altogether. “But I would freak out,” Kaley says. “I had withdrawal symptoms. It was just so hard to do anything else.” She would get up in the middle of the night to search for her phone, or “beg and beg and cry” until she got it back. When her mother removed Instagram from Kaley’s phone, Kaley sneaked a hand-me-down phone from her older sister so she could download the app again without her mother knowing.

Almost as soon as she joined Instagram, Kaley started playing with filters, enlarging her eyes, shortening her nose. “I’d take a selfie with a filter on, and then see myself – how I actually looked – and I would just feel really ugly,” she says. “It made me get all these new insecurities, and to see myself in a way that others didn’t actually see me.” Aged 10, Kaley started to cut herself. She went on to be diagnosed with depression, anxiety and clinical body dysmorphia.

Lanier didn’t want Kaley to sit through the entire trial. She gets easily distracted, he says; plus, it was his job to convince the jury that she had been seriously harmed by Google and Meta’s products. He didn’t want her to come away from it believing she was irredeemably damaged.

Delivering his opening statement, Lanier stacked three wooden ABC toy blocks on top of each other. “I thought, I will tell the jury this case is as simple as ABC – Addicting the Brains of Children,” he explains. “There’s a principle in psychology and learning called cognitive ease: we automatically assign credibility to the things we more easily understand. There’s a principle in rhetoric: the power of threes. Threes just seem to resonate within our soul and minds. ABC, one, two, three.” (In his opening statement at the Johnson & Johnson trial, Lanier used ABC Scrabble tiles to impress upon the jury that “Asbestos, Breathed or internalised, causes Cancer”.)

Then Meta lawyer Paul Schmidt delivered his opening statement, pushing back. “Was it Instagram or other causes?” he asked. He told the jury the root of Kaley’s mental health issues lay in her chaotic upbringing; that her home life and learning disabilities meant these problems would be inherent in her life anyway. Lanier bats away this idea. “Just because someone has a headache doesn’t give you the right to bash them over the head with a rock and say, ‘They already had a headache! Don’t blame me!’”

Lanier was not allowed to respond to the defendants’ opening statement in court. But as he walked out of the courthouse that day, he spoke to the throngs of media waiting there. “The next morning we get to court, and the bad guys want to have a discussion with the judge off the record.” In the judge’s chambers, he says, Meta’s team complained that Lanier’s rebuttal to their opening statement was being widely reported in the press, and called on the judge to prevent him from speaking to journalists.

Once again, Lanier deployed the power of three. “I said, ‘First of all, I didn’t do it in court – I’m on the sidewalk outside. Second of all, you’ve instructed the jury not to read any of the media. Third of all, the defendants in this case are social media. They’re producing press releases! They’re putting posts on Instagram!” (While the trial was ongoing, Meta had worked hard to spread the message that the company took the welfare of young people seriously, both on their own platforms and in their wider communications with the public.) “It makes my little comment on the courthouse sidewalk pale in comparison.’” Meta’s lawyers ultimately backed down. “The judge said, ‘You do realise there are four billboards up around the courthouse with your ads on them talking about how you care for children in all you do – and you’re complaining about Mr Lanier?’”

Lanier photographed in the library of Yarnton Manor, Oxfordshire. Photograph: Gareth Iwan Jones/The GuardianThe bereaved families outside the courthouse each day – some waving placards that read “We are KGM” – wanted the wider context of Kaley’s struggles to be recognised. But the defendants had argued that Lanier should not be allowed to mention other young people who had suffered harm as a consequence of social media use. “They wanted to make her the exception,” he says. “The sad part is, we’ve got a generation of Kaleys. Go to a restaurant and look how many people are sitting there in her age range like this …” He takes his phone from the coffee table and hunches over it. “It’s such a waste of human capital. All to make money flow to a handful of rich white guys who want to run the world.”

Parents buy the phones those kids are hunched over, I say. Shouldn’t they be able to establish and maintain ground rules? Lanier smiles. “It’s very naive to think that we have such awesome parents in this world that they can stand up against the trillion-dollar companies – with their algorithms and their deceitful tools – and be well enough informed to fight the most aggressive technology in the history of human civilisation. Kids get on YouTube at school. Kids go over to their friends’ houses. Kids have lunch with other kids. Does parenting make a difference? Of course it does. Can parents beat the machine? No way.”

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Lanier was also not allowed to talk about the content hosted on social media; in the eyes of the law, YouTube and Instagram are not publishers, so are not responsible for the content they host. “But the content is part of what they use to addict you.” Imagine going into a bookshop and idly picking up a book from one of the display tables, he says, only to see every book on every table change to be something statistically proven to be interesting to people drawn to that kind of book – including some that might shock, enrage or titillate you. Touch another title, and all the books change again, as the bookshop narrows down your interests as effectively as it can. Unlike bookshops, the social media algorithms want you to browse for ever.

“The algorithms are amoral – they’re machines. They’re relentless. You’ll never find them wavering, or low on energy, or distracted. And their entire design is to try to keep your attention on their platform. They are scary.”

Meta and Google were damned by their own documents: the millions of pages of evidence the judge required them to hand over, and a few others leaked by whistleblowers. “Through the industrious hard work of a lot of young lawyers reading, and the industrious hard work of AI, we were able to find the lines of gold.” Lanier says it was an embarrassment of riches.

Internal documents showed the companies had deliberately sought out “casino science” to turn their products into what Lanier calls “addiction machines”. Instagram, YouTube, Snapchat and TikTok all use intermittent variable rewards, giving their users little unpredictable dopamine hits, just like slot machines with their micro-payouts that keep you sticking around for a big jackpot that may never arrive, endlessly scrolling on your phone instead of pulling a handle. A 2012 Google memo about YouTube said its “goal is not viewership; it’s viewer addiction”. Another document from Google referred to its products as “slot machines”. “These are attention casinos,” it read. “The house always wins.”

There were documents from Google and Meta revealing the “dark patterns” they deploy to manipulate their users’ behaviour. Take the features Kaley’s mother wanted to use to protect her daughter: they were not easy to find, and were switched off by default. “You’ve got to determine there’s a protective feature, go find it and toggle it on,” says Lanier. “The toggle itself is subject to dark patterns: people will toggle differently if there’s a blue dot when you toggle, versus if it doesn’t change colour.”

This makes me think of my own efforts to control my Instagram feed, by toggling the button requesting that it doesn’t show me suggested content. I have to go into my settings and toggle it again every 30 days, and given that it doesn’t change colour, I’m never really sure that it has worked. “It’s insidious,” Lanier says. “And let’s say, as a parent, you do this for your kid. Did you set a calendar reminder to go back to your kid’s phone 30 days later when it defaults back?” Even if you were organised enough to do this, he adds, the platforms change their settings so often that it’s impossible to keep up.

There was a Meta document from 2018 that read: “If we want to win big with teens, we must bring them in as tweens”; a YouTube slideshow featuring children as young as four and the suggestion that parents could use the platform as a “digital babysitter”; a 2019 research report commissioned by Meta that found teens had “an addicts’ narrative about their Instagram use”, and that “they wish they could spend less time caring about it”.

Then there was the testimony given on the stand. In a memorable exchange with Lanier, Instagram boss Adam Mosseri said that 16 hours a day on the platform might be “problematic”, but he would not call it an addiction. “You can call it problematic use. You can call it tweedledee,” Lanier says. “The issue wasn’t the magic word ‘addiction’ – it was the harm.”

But the prosecution had to prove that Kaley’s use of social media caused the harm done to her mental health, and that was a challenge. “Social media companies have seeded the literature with stuff that says their product’s beneficial. For decades, big tobacco said, ‘Tobacco doesn’t really cause lung cancer – look at all these studies!’ And what you didn’t know is big tobacco had ghostwritten them or funded them,” Lanier says. A psychiatrist and a therapist both testified that, in Kaley’s case, her body dysmorphia was caused by her social media use. “The other side argued it was the residuals of bad parenting.” The sad part, Lanier says, is that Meta’s own documents show they know that when adolescent girls from low socioeconomic backgrounds with existing mental health challenges spend extended periods on social media, their mental health deteriorates.

When Zuckerberg took the stand – the first time he had testified in front of a jury – Lanier put it to him that he “saw dollar signs written on the backs” of vulnerable kids. He presented Zuckerberg with an internal document, which showed that, in 2015, a third of all 10- to 12-year-olds in the US used Instagram, even though under-13s were not supposed to have accounts, and an email from an executive that said, “Mark has decided the top priority for the company is teens.” Zuckerberg said this was no longer the way the company operated, and that he had worked for years to address “problematic use” of his platforms “because it’s the right thing to do”.

At the end of questioning, six prosecution lawyers unrolled a 50ft-wide collage of some of the hundreds of selfies Kaley had posted on Instagram. Urging Zuckerberg to look at the heavily filtered images, Lanier asked him if Meta had ever investigated Kaley’s account for problematic use. Zuckerberg did not answer.

Lanier had planned to question YouTube CEO Neal Mohan on the stand, but ran out of time – the judge had given the prosecution only 43 hours to try the case. “I decided I didn’t need him,” Lanier says. But Google is just as culpable as Meta in Kaley’s case, he adds. “YouTube was a gateway drug.”

Time pressure was one of the reasons why they decided to settle with Snapchat and TikTok before the case came to trial. “I could have hit a good verdict against them,” Lanier says, a little wistfully. He planned to compare the safety features that are present in the Chinese version of TikTok and that aren’t present in its international platform: a limit on night-time use, no infinite scroll, mandatory time-outs once users have been on the app for a certain amount of time, and the deployment of AI to determine if users are children, “based upon factors including what you’re looking at, the size of your finger when you’re scrolling, how fast you scroll. There are tons of ways that they are required to be safer over there.”

Google claimed that the entire case misunderstood YouTube; that it is a streaming platform, not a social media site. “You have an ability to message, to like or dislike, to comment, to follow. It’s not just media – it’s social media,” Lanier declares. But just in case that argument wasn’t enough, the prosecution team asked Google’s very own AI what it thought. Gemini’s response was unequivocal – YouTube is social media.

On hearing the verdict, Kaley’s overriding feeling was relief – for herself, and for all the people who can now follow her. “I knew it meant that other cases would get to go to court, so I was feeling happy for the other families.” The thousands of cases that were poised to be brought against social media companies should she win have now been set in motion. She hasn’t received any damages yet; Google and Meta are appealing, and Lanier says the process will take seven years. “However long it takes is however long it takes,” Kaley says. “I’m OK with it.” Despite her ongoing struggles with her self-image, Kaley’s victory has helped her recognise the contribution she can make to the world, and how much people value her.

Should the case end up at the supreme court, Lanier doesn’t think that the politically appointed judges will be swayed by seeing this as a partisan issue. “It crosses the political aisle. Typically, Republicans are friendly to big business in the US, but some of the most stalwart folks on this are Republicans. It matters to anybody who’s a parent.”

Photograph: Gareth Iwan Jones/The GuardianIn the meantime, Lanier is helping other legal teams who are bringing cases against social media companies, while his firm is fielding new inquiries from people who say they have been harmed by compulsive social media use. “Those that have legitimate cases that I can do, I’ll represent. It’s got to be a child that was addicted. We’ve got to have some counselling or psychiatric records. If it wasn’t bad enough to go see a professional, then it’s not bad enough to bring a case. Within the framework of that, I’ll take those cases.”

Why does the focus have to be on kids? “Children’s brains are still developing, and the last part to develop is that ability for self-control that sees future consequences. With adults, it’s going to be hard to win. The jury’s going to think, You’re an adult, you ought to be able to weigh the consequences,” Lanier replies. “The problem is, once you get addicted, addictive pathways are easily transferable to other addictions. The child who’s addicted to social media can easily become addicted to pornography, sex, gambling, pills. Your body’s ultimately just craving the dopamine.”

Of course, Lanier will not be the lead lawyer on the thousands of new cases being brought against Google, Meta, Snapchat, TikTok and other social media companies. He is clearly very good at what he does, with the skills to win against giants in big pharma as well as big tech. I wonder whether his trailblazing victory for Kaley can be replicated in other courtrooms, by other lawyers.

“That’s a fair question,” Lanier replies. “Embedded in it is a kind of compliment – so thank you, that’s kind. Does the skill of the lawyer make a difference in these cases? Yes, it does. Am I the only lawyer who can win these? Absolutely not. I’m not necessary – but I’m useful.”

In June, Keir Starmer announced a social media ban for under-16s, due to take effect in early 2027, after nine out of 10 respondents to a government survey supported it. Lanier thinks Starmer’s plans are “brilliant. It eats away at the fabric of our society if children have access to materials that they are not mature enough to handle.”

“I think it’s the first step in the right direction,” Kaley says. “But kids are sneaky and they might still find a way to get back on it.”

Some who oppose the ban – including the campaigner Ian Russell, whose 14-year-old daughter, Molly, took her own life after being deluged with suicide and self-harm content – say the only way to protect children is to force social media companies to change their business models, which rely on addictive features and algorithmically driven content. Litigation may be the only way to bring those changes, Kaley says. “They’re only going to change if somebody forces them to.”

Lanier’s firm is now working on a claim against OpenAI brought by bereaved parents who say ChatGPT was instrumental in their son’s suicide. He also has a forthcoming suit against Roblox, the most popular online game platform among eight- to 14-year-olds in the UK. “It’s a breeding ground for child exploitation, a forum that allows child predators to thrive and to connect,” he says. The addictive features of the platform will be part of that case, too.

Kaley tells me she has no idea what the future holds for her. She is still on social media, in the places that haven’t banished her in retaliation for taking legal action against them. She still posts selfies and videos; she thinks she always will, even though she hopes not to one day. “It’s very difficult.”

Lanier is considering writing a book about Kaley’s case. A documentary might be in the works. He has already starred as himself in a movie, the 2011 Chris Evans film Puncture (released as Injustice in the UK). It tells the true story of Michael Weiss, the Houston-based lawyer behind a class-action lawsuit against hospital syringe distributors in the US; after Weiss died from a drugs overdose in 1999, Lanier took on the case and won a landmark settlement in 2004.

Lanier is the first to admit that, in the past at least, he loved attention. “When I was a younger man, probably the quickest way to get hurt was to get between me and a camera,” he says, a twinkle in his eye. Perhaps that’s why, despite everything he has learned, Lanier is still on Instagram.

“I do a video thought for the day, five days a week, based on some biblical idea. They get posted on there for distribution and availability,” he says when I bring this up. “I’m not someone who thinks that social media is inherently evil. It’s like any tool: it can be used for good and it can be used for evil.”

His 15-year-old granddaughter watches his videos, he tells me. So how does Lanier see the future for her, and his 11 other grandchildren? Is the digital world going to be safer for them following Kaley’s victory?

“The optimist in me says yes. The realist in me says not so fast.” He leans forward. “Mark Zuckerberg has immense power, and power is as addictive as any drug. Do we really think that he’s going to readily abandon a portion of his power? The realist in me says this is going to be a war that will last my lifetime – and the lifetime of others.”

In the UK, the youth suicide charity Papyrus can be contacted on 0800 068 4141 or email [email protected], and in the UK and Ireland Samaritans can be contacted on freephone 116 123. In the US, the 988 Suicide & Crisis Lifeline is at 988 or chat for support. In Australia, the crisis support service Lifeline is 13 11 14. Other international helplines can be found at befrienders.org

Visitors walk near a logo of Google at Bharat Mandapam, one of the venues for AI Impact Summit, in New Delhi, India, February 17, 2026. REUTERS/Bhawika Chhabra/File Photo Purchase Licensing Rights, opens new tab

SummaryCompaniesGoogle counts India as a key growth market for search, adsCourt said Google ad platform was allowing trademark breachGoogle says ruling has major consequences for digital ad marketNEW DELHI, July 9 (Reuters) - Google (GOOGL.O), opens new tab has challenged an Indian ​court ruling that it infringed on a company's trademark rights by allowing rivals to use its ‌name as an advertising keyword, arguing the decision will hurt consumers, documents reviewed by Reuters show.

The May decision could reshape the online ads market in a country where Google last year earned $4.1 billion in gross advertising revenue but where it is also facing a raft of ​antitrust cases and court battles.

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To ensure their ads are promoted by Google and target the right customers, ​companies bid on keywords that online consumers type into the search engine.

Indian bathroom fittings maker ⁠Hindware, however, accused its rivals of purchasing keywords related to its brand on the Google ads platform, so that ​their websites appear at the top of searches when consumers typed in "Hindware".

The Delhi High Court ruled against Google in the ​case, ordering it to pay damages of $31,600 and other litigation costs.

In its 4,761-page challenge, which is not public but was reviewed by Reuters, Google said the decision makes India the "sole outlier" among global jurisdictions "with serious consequences for the digital advertising industry, online consumer choice, ​and competitive markets."

Researchers have observed that consumers may search for a brand in order to identify and assess alternatives, ​Google wrote in the July 7 filing, arguing the ruling will effectively grant trademark owners a "monopoly over advertising space to the detriment ‌of consumers."

In ⁠a response to a Reuters request for comment, Google confirmed it is appealing the order, which it said "diverges from established legal precedents in India". It added that its ads policies reflect standard practices that enable competition.

Google India's appeal will be heard in the coming days.

GOOGLE SELLING SOMETHING IT DOESN'T OWN, JUDGE SAYSIf upheld, Indian lawyers and tech experts ​say the original ruling will ​have wide-ranging ramifications for how ⁠the online ads market operates.

Indian matchmaking service Shaadi.com, for example, said that it would change the economics of online ads for millions of businesses that were suffering when their ​competitors bid on their name and Google took a fee.

Justice Mini Pushkarna noted in ​the decision in ⁠May that Google could not be permitted to shrug off responsibility after making a tool available that leads to trademark infringement.

"Google has attempted to sell something that it simply does not own," Pushkarna wrote.

Google's appeal rejects the position that it has ⁠infringed ​on trademarks, arguing that "a keyword is merely used as an internal and ​backend trigger to display an ad" and is simply "making advertising space available".

Google also faces antitrust cases in India as well as legal challenges over AI ​training and stricter-than-ever content takedown regulations that began applying to tech companies from February.

Reporting by Aditya Kalra; Editing by Joe Bavier

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Aditya Kalra is the Company News Editor for Reuters in India, overseeing business coverage and reporting stories on some of the world's biggest companies. He joined Reuters in 2008 and has in recent years written stories on challenges and strategies of a wide array of companies -- from Amazon, Google and Walmart to Xiaomi, Starbucks and Reliance. He also extensively works on deeply-reported and investigative business stories.

A year ago, Alphabet (GOOG 0.48%)(GOOGL 0.23%) traded under $180 per share and carried a market value less than half of today's. As of this writing, the stock sits at about $360 -- a clean double in 12 months, achieved by a company that was already one of the largest in the world when the run began.

A move like that leaves two groups of investors uneasy: those who own the stock and wonder whether to take profits, and those who don't and wonder whether they missed it. With shares about 12% below their 52-week high after an early July wobble in artificial intelligence (AI) trades, the question is worth asking properly. Is it too late to buy?

Image source: Getty Images.

It's not just the stock that's soaring The important thing about Alphabet's run is that it wasn't only the stock that soared. The earnings power underneath it transformed, too.

In the first quarter of 2026, Alphabet's revenue rose 22% year over year to $109.9 billion -- the company's 11th consecutive quarter of double-digit growth. Profits came with one caveat: earnings per share soared 82%, but a large slice of that jump reflected unrealized investment gains rather than operations. The cleaner signal was operating income, which rose 30% as operating margin expanded 2 percentage points to 36.1%.

The main engine behind the stock's run, however, is Google Cloud.

"Google Cloud revenues grew 63% with backlog nearly doubling quarter on quarter to over $460 billion," said CEO Sundar Pichai in the company's first-quarter earnings release.

A backlog isn't guaranteed revenue, and converting it will take years. But it gives Alphabet's growth a visibility few businesses this size can claim -- customers have effectively reserved hundreds of billions of dollars of cloud computing and AI infrastructure work in advance.

The quarter also showed a strong consumer business. Alphabet said paid subscriptions, led by YouTube and Google One, have reached 350 million -- and management called it the company's strongest quarter ever for its consumer AI plans.

And the core business has seen impressive momentum, too. Google Search and other revenue grew 19% last quarter, quieting the fear that hung over the stock through 2025 -- that AI chatbots would erode search advertising. So far, the opposite appears true, with search usage climbing alongside the new AI features.

Is there still room? A doubled stock naturally raises the suspicion that the price ran ahead of the business. The numbers, however, suggest something more balanced is happening. At about 26 times forward earnings, Alphabet trades near the valuation multiples many slower-growing defensive names command -- while compounding revenue at a 20%-plus rate. That isn't cheap in absolute terms, because nothing growing this fast is. But it's far from the valuations attached to the market's more speculative AI names.

Still, buyers today should keep three risks in view.

First, the growth requires staggering investment. Alphabet has lifted its planned 2026 capital spending to as much as $190 billion, and management expects the figure to rise significantly again in 2027. Returns on that capital could take years to prove out.

Second, the bar is high. After cloud revenue accelerated significantly in Q1 to an impressive 63% year-over-year rate, investors will likely expect further acceleration throughout the year. And the same cloud backlog that gives investors visibility also means they have high expectations.

Third, a stock that doubles in a year can retrace sharply on sentiment alone. Alphabet's own 12% slide from its high in recent weeks is a mild preview of what a broader AI-spending scare could do.

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So, is it too late?

I don't think so -- with an adjustment to expectations. The next double will almost certainly take far longer than 12 months, because the market has already repriced Alphabet from doubted search company to AI infrastructure leader. What remains is the slower, steadier compounding of a dominant business still growing faster than almost anything else its size.

For investors who watched the run from the sidelines, Alphabet, at 26 times forward earnings with accelerating growth, arguably beats most defensive names trading at similar multiples with single-digit growth. Starting a position here and building it gradually -- in case the AI trade's summer volatility offers better prices -- still looks reasonable for a long-term portfolio. The stock's rerating is likely over. But the compounding probably isn't.

Google logo is seen on a building during the opening of Google new office space in Krakow, Poland on June 22, 2026. Located in Tertium Business Park building, the offICE is a second location for Google in the city. (Photo by Beata Zawrzel/NurPhoto via Getty Images)

NurPhoto via Getty Images

This article was written by Doug Nathman, with research by his team at Trefis.

Behind the "AI" excitement lies the underlying narrative: a growing order book that indicates demand is surpassing the company's capabilities.

Alphabet (GOOGL) shares have exhibited outstanding performance, achieving a gain of 104% over the last year. Following such a notable increase, a crucial inquiry arises regarding what could facilitate further advancement. The straightforward answer is "AI," but that has morphed into a catchphrase. The genuine story is more detailed, more concrete, and it comes with a significant figure attached.

Where Is The Expansion Concealed? In A $462 Billion Order Book.Beyond the lofty assertions of artificial intelligence, it is beneficial to examine the foundational infrastructure. Alphabet's genuine engine of surprise currently is Google Cloud. In the most recent quarter, Cloud revenue surged to a 63% increase, surpassing $20 billion for the first time. This stands impressive by itself. Yet the real narrative lies within the backlog, the quantity of future business commitments made by customers. It nearly doubled within a single quarter, soaring to $462 billion. For reference, that exceeds the company's total revenue from the past year. This is not mere hype; it reflects a substantial backlog of signed agreements, driven by what management identifies as their "primary growth driver for cloud for the first time": enterprise AI solutions.

But Is This A Beneficial Issue Or Just A Dilemma?Despite all this growth, management made a significant acknowledgment: "we are compute constrained in the near term." They noted that "cloud revenue would have been higher had we been able to meet the demand." In essence, demand is so robust that they are unable to fulfill it all at present. This type of challenge is a dream for most companies. It affirms the exceedingly strong demand but also introduces a vital tension: the company must now enhance its capacity before this remarkable demand becomes a limiting ceiling on growth.

Why The Investment Surge Is The Bull Scenario.Alphabet's countermeasure is to expand. Rapidly. The company is projecting $180 billion to $190 billion in capital expenditures for 2026 and anticipates a "significant increase" in spending for 2027 from that point onward. This expenditure is not aimless spending. It represents a direct, calculated endeavor to develop the capacity necessary to cater to the $462 billion backlog and seize the demand that is currently being overlooked. They are laying foundations and installing servers with a clear vision of who will finance it.

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The market has valued Alphabet for its advancements in AI. However, the sheer, contractual volume of activities within Google Cloud indicates that the upcoming chapter may focus less on clever demonstrations and more on the straightforward economics of fulfilling an extraordinary influx of orders. The demand is no longer a projection; it is a reality, firmly displayed in the backlog. Investors should now observe how swiftly that capital expenditure is translated into recognized Cloud revenue.

Where Should You Look For The Next Narrative Like This?An opportunity of this nature only becomes significant once it manifests in the numbers, and the first solid indication appears in management’s guidance. Once a company can genuinely foresee the new revenue, it elevates its forecast, and an improved forecast that the market is already rewarding represents one of the clearest pieces of evidence that such a story is materializing. F5 (FFIV), Flex (FLEX), and Federal Realty Investment Trust (FRT) are currently signaling precisely that. Our Guidance Momentum screen monitors every S&P 500 entity where a rising forecast correlates with real price momentum, allowing you to seek out the next opportunity like this one while it is still in its infancy. Additionally, if you prefer to invest in the entire theme rather than wager on a single entity, a communication services ETF such as XLC encompasses the full spectrum.

Where Should A Stock Like This Reside In Your Portfolio?A compelling growth narrative is an excellent beginning. A well-organized collection of such narratives forms a strategy. An engine like this is important because it can continue to compound subtly over the years, and a stock that compounds is worthwhile to own, but focusing on any single entity is where well-conceived ideas can be penalized. A diversified assortment of equally well-researched stocks mitigates the risk associated with single-stock concentration. The challenging aspect is determining which stories truly deliver, and that ranking forms the core of the Trefis methodology.

The Trefis High Quality (HQ) Portfolio assesses the overall quality across thousands of equities, not just one catalyst, incorporates the 30 strongest stocks, and rebalances them with rigor. It has a proven record of surpassing a benchmark that merges the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000.

A Google Cloud logo is pictured at a trade fair in Hannover Messe, in Hanover, Germany, April 22, 2024. REUTERS/Annegret Hilse//File Photo Purchase Licensing Rights, opens new tab

JOHANNESBURG, July 1 (Reuters) - Google (GOOGL.O), opens new tab has exceeded a five-year target to invest $1 billion in Africa, it said on Wednesday, ​as it made public initiatives on infrastructure and development ‌of AI to accelerate the continent's digital growth.

They follow on from Google's launch of a cloud for the Johannesburg region in 2025.

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Here are ​the details of the new initiatives that Google, ​owned by Alphabet, announced at the first Africa Cloud ⁠Summit in Johannesburg.

Google will establish a connectivity hub in South ​Africa's Eastern Cape, the first of four planned connectivity hubs ​on the continent.

The facility will link Africa to Australia via the Umoja subsea cable and to India through a new route, strengthening internet ​resilience and capacity.

Africa's first applied AI lab in Ghana will ​pair local startups with Google researchers and provide early access to its ‌AI ⁠models.

A more than $1 million programme in partnership with UK actor Idris Elba's Akuna Group will train underrepresented creators in AI-driven storytelling.

Google's Economic and Community Development programme and WeThinkCode have committed ​to build a ​3 million ⁠rand ($183,468) digital innovation centre in Soweto, Johannesburg.

Google also said its startup accelerator programme will back ​15 South African firms as part of Google's ​pledge ⁠to back 50 African ventures between 2024 and 2028.

"The AI opportunity for Africa is significant, and Google is committed to doing ⁠our ​part working with Africans to help Africa ​realise it," James Manyika, Google's senior vice president for research and technology, ​told reporters.

($1 = 16.3516 rand)

Reporting by Nqobile Dludla; editing by Barbara Lewis

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Nqobile is a Johannesburg-based reporter covering the South African retail, telecom and tech sectors. She has been a journalists for about 10 years. She joined Reuters in 2015 and has covered a variety of beats ranging from pharma, health to property and banking.

By PYMNTS  |  June 30, 2026

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British regulators want Apple and Google to let developers steer users to payment methods beyond the company’s app stores.

The Competition and Markets Authority (CMA) issued a proposal Tuesday (June 30) that would lift the restrictions imposed by the companies that prevent app developers from directing users to alternative methods of payment.

“We think it is important to give both app developers and users more choice about how they communicate and how they transact,” Will Hayter, executive director for digital markets at the CMA, said in the watchdog’s announcement.

“This is not only because choice is inherently valuable but also because we see this as the best way to introduce some competitive pressure in a vital part of the mobile ecosystem that is otherwise sorely lacking such pressure.”

The CMA says it would expect any steering fees to be lower than current app store charges, with savings returned to British consumers or invested into developers’ businesses.

The release added that the CMA had heard concerns from businesses that Apple’s “high fees and strict terms” had barred access to near field communication (NFC) functionality. Now the regulator said it is “designing a potential requirement” that would permit access for developers.

Unblocking the restriction would allow British FinTechs and developers to support contactless transactions, such as card-based payments via digital wallets, from within their iOS apps. 

“Doing so would help unlock innovation and competition by supporting future payment methods such as account-to-account, digital currency and stablecoin, as well as other non-financial uses, including digital ID and car keys,” the release added.

A report on the CMA proposal by the Financial Times includes a statement from Apple arguing that the policy would “undermine” the App Store’s consumer protections, “opening the door to scams, bait-and-switch tactics and the circumvention of parental controls.” Google told the news outlet it had already reduced its fees.

The CMA’s proposal comes one day after a report that Apple had intensified its legal battle with India’s competition regulator over the company’s app store policies. Apple has consistently denied breaking Indian antitrust laws.

The company’s app store policies have also faced pushback from developers in the European Union, and were the subject of a lawsuit in China last year. Apple is also facing antitrust litigation in the U.S. related to the app store.

Apple released findings earlier this month showing that the app store facilitated more than $1.4 trillion in developer sales/billings during 2025, and that those developers paid no commission to Apple for 90% of transactions.

“Developers are the heartbeat of the App Store, and this year’s incredible milestone is a testament to their boundless creativity,” Apple CEO Tim Cook said in a news release at the time.

Alphabet GOOG shares rose 4.1% in trading on Monday as the Google parent began its first trading session as a member of the Dow Jones Industrial Average, replacing Verizon Communications in the 30-stock benchmark.

The index change, announced last week, marks a milestone for Alphabet.

However, because the Dow is a price-weighted index rather than one weighted by market capitalization, analysts do not expect the stock to receive the same boost from passive investment flows that typically accompanies inclusion in the S&P 500.

The stock also benefited from a broader rebound in technology shares after last week's sharp selloff.

The Roundhill Magnificent Seven exchange-traded fund, which had fallen 13% in June through Friday and was on track for its worst month since its launch in April 2023, traded higher alongside several of its largest constituents.

Meta Platforms, Amazon and Tesla each rose more than 2%, while Nvidia and Microsoft gained more than 1%. Apple lagged the group with a modest 0.1% gain.

Investor sentiment was also influenced by reports that Google has limited Meta's access to its Gemini artificial intelligence models because demand exceeded available computing capacity.

According to the Financial Times, Google informed Meta around March that it could not provide all the Gemini capacity the social media company wanted to purchase.

The restrictions remain in place and have delayed some of Meta's internal AI projects while prompting the company to encourage employees to use AI tokens more efficiently.

Several other Google customers have also been affected by the capacity limits, although to a lesser extent.

Meta has faced greater disruption because of its exceptionally high demand for Google's AI models.

The restrictions highlight growing infrastructure bottlenecks across the artificial intelligence industry, where surging demand for advanced models has outpaced available computing resources despite massive investment in chips, data centres and power.

Google has moved to expand its capacity, including signing a $920 million-per-month agreement with SpaceX earlier this month to lease additional computing resources.

During Alphabet's first-quarter earnings call in April, Chief Executive Sundar Pichai acknowledged the company's capacity limitations.

"Obviously, we are compute-constrained in the near term," Pichai said. "And as an example, our Cloud revenue would have been higher if we were able to meet the demand."

Alphabet reported 63% revenue growth in its cloud computing business during the first quarter, its strongest growth since it began disclosing the figure in 2019.

The company also reported that its cloud revenue exceeded $20 billion for the first time, while its backlog of signed but undelivered cloud contracts nearly doubled quarter over quarter to more than $460 billion.

Technical picture remains mixedDespite Monday's gains, Alphabet's technical outlook remains mixed.

The stock has climbed 96% over the past 12 months and continues to trade about 11% above its 200-day simple moving average of $314.41, suggesting that the longer-term uptrend remains intact.

However, near-term momentum remains weaker. Alphabet is trading 2% below its 20-day simple moving average of $359.34 and 4.9% below its 50-day simple moving average of $369.57, indicating that the stock remains in a recovery phase rather than a sustained breakout.

Google Technicals The 20-day moving average also remains below the 50-day moving average, a bearish crossover that suggests recent rallies have faced stronger selling pressure than earlier in the longer-term advance.