🥕 Alphabet: The Tug-of-War Between AI Investment and Profitability Ahead of Earnings - 2026.07.21

Alphabet (GOOG) stock closed at $351 as of July 20, up 1.46% from the previous day ^[6]. But the real importance starts now. It's the Q2 earnings to be announced next month on July 22 (local time) ^[8].

📊 Earnings Report: The Tug-of-War Between AI Investment and Profitability

The core of this earnings report is the balance between 'AI investment costs' and 'growth' ^[1]. Investors are closely watching whether Alphabet can drive revenue growth while bearing massive AI infrastructure spending ^[2]. Especially amid rising concerns about an AI bubble, warnings are emerging that Alphabet could be the first company to reduce AI capital expenditure (Capex) ^[3]. This will likely become a key variable determining the stock's direction.

💡 Dedicated Server Chip Development Signals Enhanced Efficiency

News has emerged that Alphabet has begun developing dedicated server chips to improve AI model efficiency ^[4]. Interpreted as a strategic move to strengthen AI infrastructure competitiveness at the hardware level, this acted as a catalyst for the stock rise. We must wait for the earnings report to see how much this chip contributes to actual profitability improvement.

🏛️ Berkshire Hathaway Still Holds Alphabet as Core Asset

Under CEO Greg Abel, Apple and Alphabet together account for nearly 30% of Berkshire Hathaway's $348 billion stock portfolio ^[5]. This suggests Alphabet remains one of Berkshire Hathaway's core holdings, serving as an indicator of long-term confidence.

📈 Market Sentiment: Will KOSPI Rebound?

Alphabet's earnings will also act as a major variable in the domestic market. Securities firms forecast that Alphabet's results could dispel AI skepticism and serve as a turning point for a KOSPI rebound ^[9]. In particular, if Alphabet demonstrates AI profitability and signals expanded facility investment, this could lead to increased demand for data centers and memory semiconductors, weakening arguments for a semiconductor peak ^[10]. Along with Microsoft and Meta's upcoming earnings reports next week, these are being closely watched as key variables capable of shifting market sentiment ^[9].

🎯 Carrot's Perspective

Alphabet's stock is currently in a correction phase, down 15% from its all-time high ^[7]. However, news of dedicated chip development and Berkshire Hathaway's significant holdings are positive signals. Nevertheless, market concerns over AI investment costs remain strong, so it is crucial to carefully check plans for AI-related expenditures and profitability improvements during the earnings release.

Carrot believes that if Alphabet's AI investment efficiency becomes clearly evident in the earnings report, stock volatility will decrease.

No full buy, no full sell; act only when support levels break.

Until the July 22 earnings release, we'll keep watching the chart and market sentiment! 🥕

📰 Reference News (8)

1

Alphabet: Critical Questions That Will Define Q2 2026 Earnings (NASDAQ:GOOG) - Seeking Alpha

Seeking Alpha · 2026.07.20

📰 View original

3

AI Bubble Burst: Alphabet Could Be The First To Cut AI Capex (NASDAQ:GOOG) - Seeking Alpha

Seeking Alpha · 2026.07.20

📰 View original

4

Alphabet perks up on report it's working on server chip to increase AI model efficiency (GOOG:NASDAQ) - Seeking Alpha

Seeking Alpha · 2026.07.20

📰 View original

7

GOOGL: Alphabet Stock Down 15% from Record as Traders Eye Q2 Earnings Report - TradingView

TradingView · 2026.07.20

📰 View original

📺 Reference Videos (2)

9

YouTube

KOSPI Retreats Past 6,000... Key to Rebound Lies with 'Alphabet and Middle East' / YTN

▶ YTN·2026.07.19

10

YouTube

[Economy at a Glance] "War and Even Semiconductor Peak Theory"… Key Issues Shaping This Week's Market / KBS 2026.07.20.

▶KBS News·2026.07.20