TLDRs;
- Alphabet gains momentum as Gemini 3 adoption expands despite new EU regulatory risks.
- Strong Q3 earnings, Cloud acceleration and TPUs drive investor confidence in 2026 outlook.
- EU opens fresh probe into Google’s AI training practices, raising multi-billion-dollar risks.
- Analysts remain bullish, citing Alphabet’s AI moat, cloud scale and infrastructure strategy.
Alphabet (GOOGL) entered the December 9 trading session balancing one of the strongest AI product cycles in its history against yet another major regulatory challenge.
But for investors, the story was clear, Gemini 3’s rapid adoption is currently doing more to lift Alphabet shares than European legal pressure is doing to weigh them down.
By midday, Alphabet’s Class A (GOOGL) and Class C (GOOG) shares held near the $313–315 range, keeping the stock firmly in record-high territory after a year of exceptional performance. With a market cap hovering around $3.8 trillion, Alphabet is now the third most valuable company on the planet a position cemented as 2025 turned into a defining year for Google’s AI renaissance.
The company’s transformation from perceived AI laggard to full-stack AI powerhouse is largely tied to Gemini 3, its newest multimodal model. Integrated across Search, Workspace, YouTube and Google Cloud, the system has quickly become the core of Google’s AI strategy. Analyst reports cite more than 650 million monthly Gemini users, alongside tens of millions of daily active interactions across consumer and enterprise surfaces.
This surge in usage has fueled a meaningful re-rating of Alphabet’s valuation, pushing the company firmly into premium AI territory. Investors now treat Alphabet less as a mature ad-driven giant and more as a vertically integrated AI infrastructure leader.
AI Strength Anchored by Q3 Breakout Performance
A major pillar behind today’s stock resilience is Alphabet’s historic Q3 2025, its first quarter ever surpassing $100 billion in revenue.
Revenue hit roughly $102.3 billion, up 16% year over year, while net income grew more than 30% to around $35 billion. Search and YouTube ad segments continued to deliver steady double-digit growth, but the outsized story was Google Cloud, which jumped 34% and expanded margins sharply due to AI workloads.
Alphabet also generated more than $48 billion in operating cash flow in the quarter, giving it ample room to fund its AI-heavy capital spending, a projected $91–93 billion for 2025, without compromising balance sheet strength. Even after aggressive capex, Alphabet remains in a clear net-cash position with nearly $100 billion in liquidity.
EU Probe Adds New Regulatory Overhang
But Alphabet faces a new cloud over its AI momentum, a fresh European antitrust probe targeting Google’s use of online content to train Gemini models.
Regulators are examining whether Alphabet unfairly requires publishers and creators to allow AI training for their content to remain indexed or monetized. They are also investigating whether Google gives its own AI systems privileged access to YouTube and web content while restricting rival developers.
Potential penalties under EU law could reach up to 10% of global revenue, placing theoretical exposure in the tens of billions of dollars. Although early market reaction has been muted, the investigation introduces another layer of uncertainty for the company’s AI Overviews strategy and content-licensing economics.
Still, the immediate effect on the stock has been limited. For now, investors seem convinced that Alphabet’s AI execution is outpacing regulatory drag.
Analysts Expect AI Momentum to Continue
Despite the regulatory noise, Wall Street remains broadly supportive. Most analysts maintain Buy or Outperform ratings, with price targets clustering around the $310–$330 range and more bullish forecasts pointing toward $390–$420 over the next 12–18 months.
Much of this optimism is anchored in Alphabet’s AI infrastructure moat, its in-house Gemini models, custom TPUs, global cloud distribution and rapidly growing enterprise agent ecosystem. As more developers and enterprises standardize on Gemini 3 and Google Cloud, including newly launched agentic solutions from partners like EPAM, Alphabet’s long-term AI revenue streams look increasingly durable.
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