Alphabet Inc. has seen its stock soar roughly 130% over the past twelve months, reaching a market capitalization of $4.6 trillion, second only to Nvidia. The rally has been fueled by extraordinary AI momentum, with Q1 2026 revenue hitting $109.9 billion — a 22% year-over-year increase, the fastest in 16 quarters. Google Cloud revenue jumped 63% year-over-year, outpacing both AWS and Azure, and ended the quarter with a $462 billion customer backlog, nearly double the figure from three months prior. The Gemini AI application now boasts over 650 million monthly active users, up 45% quarter-over-quarter, while Google Search revenue rose 19%, driven by AI Overviews and AI Mode.
However, the bull case is facing a fresh headwind from Brussels. The European Commission is preparing a major fine under the Digital Markets Act (DMA) over alleged self-preferencing in Google Search. Regulators argue that Alphabet-owned services such as shopping, travel, and flight comparison tools are being prioritized over rivals, limiting competition. The penalty is expected to reach a high triple-digit million-euro figure — potentially exceeding earlier DMA fines against Apple (€500 million) and Meta (€200 million). The EU could theoretically fine up to 10% of Alphabet’s global annual turnover, but current talks point to a more moderate sum.
Alphabet has said it is actively engaging with the EU and prefers a dialogue-based resolution. The company recently received extra time to adjust its search practices. Still, the regulatory uncertainty adds pressure to a stock that is also grappling with aggressive capital spending — capex is projected to hit $180–190 billion in 2026, with plans to scale compute capacity to 35 gigawatts by 2028. While analysts remain largely bullish (Wells Fargo: $387 target, BofA: $335), the return on that colossal investment and the outcome of the EU probe will be critical factors for the stock’s trajectory.
