Key points:

• Could it be…
• The start of…
• Something good?

After a few weeks of heavy beating, Alphabet is testing a support which three months ago sparked heavy buying. Can it happen again?

🧱 Double Bottom or Dead Bounce?

• Alphabet stock GOOGL has slid roughly 15% from its $350 record high to a three-month low near $297. On Tuesday, the shares bounced. That $297 zone held back in November and sparked a sharp rally. Could it be… a double bottom?
• A double bottom is a technical pattern where price tests the same support twice and rebounds. It signals sellers may be exhausted and buyers hungry. Confirmation, however, requires follow-through buying and a break above interim resistance.
• Momentum gauges are flashing early optimism. The RSI, which tracks overbought and oversold conditions, is lifting from depressed levels. The MACD, a trend indicator, is curling higher. Signals are constructive, though hardly a victory lap.

💰 The $185B Elephant in the Room

• The bounce arrives amid growing anxiety over AI spending. Alphabet outlined 2026 capital expenditures between $175 billion and $185 billion, well above forecasts. That is a massive commitment to data centers, chips and infrastructure.
• Capital expenditures, or capex, represent long-term investment in assets. While they can drive future growth, they also compress free cash flow today. Investors are recalibrating how quickly AI spending converts into visible earnings power.
• Across Alphabet, Microsoft, Meta and Amazon, combined capex could approach $700 billion this year. The AI arms race is accelerating. The market is simply asking whether revenue growth can keep pace with the bill.

📊 Time to Buy the Dip?

• From a valuation lens, Alphabet now trades well below its peak despite revenue growth in the mid-teens and solid margins. Bulls argue the reset prices in most of the capex shock. Bears counter that expectations may still be too rosy.
• Technically, reclaiming the $320 to $330 region would strengthen the bullish case. Failing to hold $297 would invalidate the double bottom narrative and reopen the door to deeper retracement levels.
• The setup is clear: support is defined, risk is measurable, and sentiment is cautious. For traders, that combination can be attractive. For investors, the question remains simple. How patient are you with AI returns?

Source: Tradingview