Google’s $185 Billion AI Bet Faces a Two-Pronged Test: Brussels and the Balance Sheet

Alphabet shares are trading at roughly €290, a whisker shy of their 52-week peak and up 111% over the past twelve months. Yet beneath that impressive run lies a story of mounting pressure on two fronts. In Brussels, regulators are circling Google’s Android ecosystem with fresh demands for AI competition. On Wall Street, investors are waiting for proof that the company’s record-breaking infrastructure spending will pay off.

The EU’s New Target: Gemini’s Home-Field Advantage

The European Commission has trained its sights on the asymmetry baked into Google’s mobile operating system. Users of the company’s own Gemini assistant enjoy deep, system-level integration on Android devices. Rivals such as ChatGPT or Claude, by contrast, are relegated to standard app access — a competitive disadvantage that Brussels considers a violation of the Digital Markets Act.

Two separate DMA proceedings are already underway. The EU is demanding that Google grant third-party AI services interoperability rights and share anonymized search data. The company has pushed back, warning that such concessions could open the door to serious security vulnerabilities. The Commission has set a deadline of late July 2026 for a binding decision, giving both sides time to negotiate — or dig in.

Cloud Momentum and a $750 Million AI Agent Fund

Away from the regulatory noise, Alphabet is charging ahead. At its Cloud Next conference, Google Cloud chief Thomas Kurian unveiled a strategic partnership with Apple: Gemini will soon power the architecture behind Siri. The company also announced a $750 million fund to help consulting giants like McKinsey and Deloitte bring agentic AI — autonomous virtual assistants capable of handling complex business tasks — to their corporate clients. A separate tie-up with Vista Equity Partners adds further heft to the push.

On the hardware side, Google teamed up with Arista Networks to launch Virgo, a networking system capable of linking up to 134,000 chips. The technology is designed to dramatically accelerate data center communications. The company is also deepening its collaboration with Nvidia to make AI workloads in the cloud faster and cheaper.

Internal Efficiency, External Anxiety

CEO Sundar Pichai recently revealed a striking internal metric: artificial intelligence now generates 75 percent of all new code written at Google. Engineers, he said, are largely reviewing and approving drafts rather than writing from scratch.

Should investors sell immediately? Or is it worth buying Alphabet?

But behind the scenes, unease is creeping in. According to media reports, some executives worry that Google is losing ground to rivals like Anthropic in the race for external developer tools. An overcrowded product lineup with confusing branding is, they fear, diluting the company’s edge.

Analysts remain broadly constructive. UBS raised its price target on Alphabet from $348 to $375, though it kept a “Neutral” rating on the stock. The reasoning: much of the good news is already priced in.

The Earnings Moment of Truth

All eyes now turn to Wednesday, April 29, when Alphabet reports first-quarter results. Analysts are looking for earnings per share of $2.68 on revenue of roughly $107 billion. That would represent a slight year-on-year dip in profitability.

The real focus, however, will be on the cost side. Management has flagged capital expenditures of up to $185 billion for the current fiscal year — nearly double the prior year’s level. The justification rests on a bulging order book: as of late 2025, cloud customers were waiting for AI capacity on contracts worth $240 billion.

Yet the depreciation charges from all those new data centers are starting to bite. Some analysts are forecasting negative free cash flow for 2026. To keep Wall Street onside, Google Cloud’s revenue growth will need to comfortably exceed 50 percent year-over-year. Management’s commentary on the timing and phasing of the investment splurge may well move the stock more than the headline revenue number.