Alphabet Shares Fall as Search Slows and AI Talent Leaves
Google stock price pressure has widened as Alphabet shares fell 6% over the past month, even after strong cloud results and fresh attention from Berkshire Hathaway’s $10 billion investment.
NEW YORK — Google stock price pressure has deepened as Alphabet shares fell 6% over the past month, lagging the S&P 500’s 3% advance over the same period, according to Yahoo Finance AlphaSpace data. Investors are weighing whether slowing search growth and talent departures around Alphabet’s AI unit are starting to matter more than the company’s strong cloud numbers.
That gap has put a spotlight on how much of Alphabet’s recent stock move is tied to artificial intelligence execution. One analyst said the debate is now centered on search momentum and the loss of key people from Gemini, Google, DeepMind and Google broadly.
Search growth and talent losses
Eric Sheridan, business unit leader of the TMT Group within Goldman Sachs Research, said on Yahoo Finance’s Opening Bid that “there’s two debates that are weighing on Alphabet shares.” He said the first is that “search slowed down a little bit more than investors expected [in the second quarter].”
He said the second, bigger issue is “there’s been brain drain,” pointing to departures from folks at Gemini, Google, DeepMind, Google broadly, and a delay for Gemini’s next-generation model, the 3.5 Pro. “And now they’re talking about Gemini four,” Sheridan said.
Several prominent names have left or seen their roles reshuffled at Alphabet. Demis Hassabis is now the former CEO of Google DeepMind and has moved into a chairman role of that unit. He has also assumed the chief scientist title. Jeff Dean, whose chief scientist role had been occupied by him, has left the company after 27 years to start his own company with Google senior fellow Sanjay Ghemawat.
Sheridan also tried to cool fears that the departures will damage the business in a lasting way. “I don’t know that you’re going to see it,” he said on the potential negative impact from Alphabet’s brain drain. “I think they have a lot of talent. They have a very deep bench.”
Why the latest quarter still mattered
The pressure on Google stock price has come even as Alphabet posted a strong second quarter. The standout was Google Cloud, where revenue surged 82% to $24.8 billion, while the company’s cloud backlog rose to $514 billion. Those numbers signaled heavy demand for AI infrastructure, even as investors focused on the cost and complexity of keeping pace in the AI race.
YouTube also added to the quarter’s strength. Revenue came in at $11.1 billion, up 13% from the prior year. Still, the market reaction suggests investors want proof that Alphabet can turn that operational strength into steadier share performance.
The tension is straightforward. Big AI spending can support growth, but it can also raise questions about timing, returns and execution. That is the tradeoff hanging over Alphabet now.
Berkshire’s stake adds another layer
Fresh attention on Alphabet came from Berkshire Hathaway too. Fortune reported that Berkshire Hathaway’s new CEO Greg Abel invested $10 billion in Google’s parent company and repurchased about $4.5 billion of its shares. The company’s cash holdings fell to $365.5 billion from nearly $400 billion at the end of March.
The same report said Berkshire’s second-quarter earnings disclosure showed more than $24 billion worth of commercial, industrial and other stocks added to its portfolio, though the earnings report did not name every stock it bought. A separate filing later this month is expected to show the full list.
For Alphabet, that kind of buying can help soften the bearish mood, but it does not erase the concerns already circling the stock. Traders are still watching whether search growth steadies, whether the Gemini lineup stays on track and whether the company can keep talent from walking out the door. The next filing from Berkshire may offer one more clue about how large investors are positioning around the name.
