Will Warren Buffett’s massive $31 billion bet be enough to save Alphabet AI from its latest Gemini setback?
How Did the Stock Move This Week?
Over the week, Alphabet shares experienced significant volatility. Measuring from Monday’s opening price of 353.99 to Friday’s close of 346.12, the stock recorded a weekly decline of -2.2%. Along the way, it reached a weekly high of 374.35 and a weekly low of 341.13.
The week’s trading was defined by two notable outlier days. On Wednesday, the stock surged +3.6% following a major public endorsement from legendary investor Warren Buffett. However, this momentum was completely erased on Thursday, when the stock tumbled -4.4% on reports that the company’s next-generation AI model faced internal delays.
Why Is Warren Buffett Regretting His Google Miss?
The mid-week rally was sparked by Berkshire Hathaway chairman Warren Buffett, who admitted he made a mistake by not investing in Google years ago when it was “asset-light and a market darling.” Buffett confirmed he personally drove the decision to build Berkshire’s massive $31 billion position in Alphabet, which includes $21 billion in public shares and a $10 billion private placement to help fund its infrastructure.
Buffett highlighted that Alphabet’s unique approach to funding its capital expenditures—relying on equity rather than debt—insulates it from the rising risks of the broader AI build-out. Berkshire now holds Alphabet as its fifth-largest position, sitting just behind Apple, American Express, Coca-Cola, and Bank of America.
What Is Holding Back Alphabet AI Progress?
The positive sentiment quickly soured on Thursday following reports that the release of Gemini 3.5 Pro has been delayed by several months. Internal testing reportedly revealed that the model fell short of expectations in key areas like coding, failing to close the performance gap against rivals like OpenAI and Anthropic. This news highlighted organizational friction within DeepMind, Cloud, and Android teams, raising concerns that the company is losing ground in the **Alphabet AI** race.
Furthermore, the European Union delivered binding instructions under the Digital Markets Act, ordering Google to open its Android operating system and search data to competing AI services. Meanwhile, autonomous vehicle subsidiary Waymo faced scrutiny from San Francisco’s mayor over traffic disruptions, drawing parallels to the regulatory eyes currently on Tesla and its driverless efforts.
How Do Analysts View the Upcoming Earnings?
Despite these setbacks, Wall Street remains largely bullish ahead of Alphabet’s second-quarter earnings report on July 22. Wedbush assumed coverage of the stock with an Outperform rating and a $445 price target, calling it the best-positioned full-stack AI franchise.
Similarly, BofA Securities analyst Justin Post maintained a Buy rating with a $430 target, projecting a massive 70% growth in Google Cloud. Post raised his Q2 EPS estimate to $8.38—well above the consensus of $2.90—due to an estimated $80 billion unrealized gain from the revaluation of Alphabet’s 14% stake in Anthropic. Conversely, UBS maintained a Neutral rating, slightly lowering its price target from $410 to $400, while BMO Capital maintained an Outperform rating and raised its target to $455.
Related Coverage
For further insights into how the tech sector is managing these massive infrastructure investments, read our analysis on the TSMC Earnings: How a $64B CapEx Plan Sparked a Tech Shock.
Additionally, discover how market dynamics shifted earlier in the week in our report on how the Alphabet Stock Surges 3.5% as Cloud Growth Shocks Wall Street.
They’re more likely to be a winner based on their record than probably 90% or 95% of what gets merchandised through Wall Street.— Warren Buffett
In conclusion, Alphabet’s week perfectly illustrated the dual nature of the current tech landscape: immense long-term value contrasted against short-term execution and regulatory risks. While Warren Buffett’s multi-billion-dollar backing provides a powerful vote of confidence, the delays in Gemini 3.5 Pro show that the road to **Alphabet AI** dominance is far from smooth. As investors look ahead to next week’s crucial earnings report, the focus will remain on whether the company can overcome its current development hurdles and deliver the high-margin growth Wall Street expects.
