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Earnings are out! Revenue and net profit surge together—yet the stock price is falling? — Google stock quote and trend analysis

This week, US stocks entered the tech earnings season. The “Seven Giants” will release their Q2 results one after another. Unexpectedly, the opening turned out to be a knockout: first up was Alphabet, Google’s parent company. Its latest earnings report shows that thanks to an astonishing 82% surge in its cloud business, Google’s revenue in the second fiscal quarter broke through $119.8 billion (about RMB 811 billion), and net profit also surged to $112.1 billion (about RMB 758.9 billion). Both figures exceeded analysts’ expectations. However, behind the stellar performance, the company saw its first cash-flow outflow since listing during Q2. Massive spending on AI infrastructure has already transformed it from an asset-light business into a capital-intensive one. What really left Wall Street rattled is that Google not only hit a cash-flow bottom, but also raised its capital expenditure guidance further in the report to a high range of $195 billion to $205 billion. The capital markets immediately “changed their tune.” Google’s stock fell more than 1% on the day, and as of today, in after-hours trading it is down more than 3%. So will Google’s stock keep falling afterward, and can you buy the dip from here? Let’s take a look:

I. Market recap

Alphabet, Google’s parent company, released its 2026 second-quarter earnings in the early hours of July 23 Beijing time. Overall results beat market expectations, but a major expansion in capital expenditures triggered heavy selling. The report shows that in Q2, the company achieved revenue of $1,197.96 billion, up 24% year over year—above the market’s expectation of about $1,169 billion; operating profit was $407.70 billion, up 30% year over year; and operating margin rose from 32% in the same period last year to 34%, showing a clear improvement in profitability. Google Cloud’s performance was particularly impressive: revenue jumped 82% year over year to $24.8 billion, and the remaining contract backlog already exceeded $500 billion.

However, the market reaction was completely the opposite. During the earnings call, Alphabet announced that its full-year 2026 capital expenditure guidance was raised sharply from the prior range of $180 billion to $190 billion to a new range of $195 billion to $205 billion, and it expects 2027 capital expenditures to increase significantly as well. Q2 standalone capital expenditures soared to $449.24 billion. Free cash flow turned from positive to negative at -$58.55 billion, triggering investors’ deep concerns about a “burn cash to buy growth” model. At the same time, the release timeline for its flagship AI model, Gemini 3.5 Pro, was delayed, further intensifying investor worry.

After-hours, the stock price immediately plunged by more than 4%. After US trading opened on July 23, selling pressure intensified further. Google A (GOOGL) fell 6.15% on the day, with an intraday low around $317.91. Google C (GOOG) also dropped sharply, to $319.33. Meanwhile, overall market risk-off sentiment warmed up. The US-Iran conflict pushed international oil prices above $90, and US stocks saw all three major indexes open lower: the Nasdaq fell 1.74%, and the fear gauge VIX rebounded to 19.45.

II. Technical indicator analysis

‌Moving average system: The price has quickly broken below the 50-day and 100-day moving averages. It is currently pressing toward the 200-day moving average, around $323. This moving average has been an important technical support since June 2025. Once it is lost, it would imply that the medium-term trend turns fully bearish. The short-term 5-day moving average has sharply turned downward and has formed a typical bearish alignment with the 10-day and 20-day moving averages, meaning near-term selling pressure has not yet been fully released.

‌Momentum and volume: This round of decline came with a significant increase in trading volume, which is a classic “high-volume breakdown” pattern. It suggests that institutional funds concentrated their exits under the catalyst of negative earnings news. Earlier, when the stock was trading sideways in the $340 to $380 range, it accumulated a large amount of profit-taking positions. The earnings report became the trigger for taking profit and cutting losses. The sudden surge in volume confirms how loose the held positions have become.

‌Relative strength and volatility: After consecutive declines, the RSI indicator is approaching the oversold zone. There may be demand for a short-term technical rebound, but no clear bottom-reversal signal has formed yet. Implied volatility rises rapidly around the earnings release, reflecting a sharp increase in the market’s pricing of uncertainty. In the short term, high-volatility, range-bound trading is likely to remain the norm.

‌On-chain and options market: Options data shows that a large call-option wall around $340 has already been effectively breached. Meanwhile, put-option open interest has clearly increased around $320, indicating traders are actively positioning to protect against downside at that level. This also means $320 will become a key battleground where bulls and bears fiercely compete.

III. Key support levels and resistance levels

‌Core support levels: The first support is at $323, corresponding to the 200-day moving average. This is the last major defense for bulls since June 2025. If this level is effectively broken to the downside, the technical picture will turn bearish completely. The second-strong support is at the $300 psychological level. This level is the lower edge of a prior area with dense positioning. If the 200-day moving average is lost, the market will quickly look for support around there. Under extreme conditions, the $280 to $290 range is near the initial breakout point in early 2025 and represents the ultimate line of defense for long-term bulls.

‌Core resistance levels: The first short-term resistance is at $340 to $342—around the closing price before the earnings were released. It is also the lower boundary of the prior consolidation range. If the stock rebounds back to this zone, it will face heavy overhead selling pressure from trapped longs. The second medium-term resistance is at $365 to $380. This corresponds to the upper end of the earlier dense sideways range and a concentrated area of open call options. To break through, a substantive improvement in fundamentals or a catalyst is needed.

IV. Outlook

‌Short-term: The market is in a critical validation period during earnings season. Google’s business model of “high investment, high growth, and low cash flow” is now being put under strict scrutiny by investors. Against a macro backdrop of high oil prices and rising real yields on US Treasuries, higher financing costs further suppress market tolerance for high-valuation tech stocks. However, considering that the RSI has entered the oversold zone and there is demand for a technical rebound after the concentrated release of near-term selling pressure, the stock around $323 may have the potential to stabilize and rebound. For rebound targets, you can first look at $340.

‌Medium- to long-term: Google’s core competitive moat has not been weakened. Google Cloud’s 82% growth rate, a contract backlog of more than $500 billion, continuous investment in AI infrastructure, and ongoing iteration of the Gemini model all provide solid foundations for long-term growth. But investors’ core concern is whether the marginal return on capital expenditures can be validated in the next two to three quarters. If cloud revenue growth continues to stay higher than capex growth, the market will gradually absorb the near-term cash-flow pressure, and the stock has a chance to rebuild a base in the $320 to $350 range before regaining an upward trend.

‌Risk warning: Three major variables need close attention. First is the US-Iran geopolitical situation and the trajectory of oil prices—if oil stays at high levels, it will weigh on overall tech stock valuations. Second is the Federal Reserve’s policy statements. If inflation expectations rebound and raise rate-hike expectations, high-valuation growth stocks will be hit first. Third is the chain reaction from subsequent earnings reports from tech giants: capital expenditure guidance from companies such as Microsoft and Amazon will directly affect market confidence in the AI investment narrative. At the current stage, it is not advisable to aggressively buy the dip from the left side. Instead, it is recommended to wait until the stock stabilizes at key support levels and trading volume shrinks before reassessing potential entry opportunities.