Alphabet shares closed the week at $396.78 on Friday, down 1.07% for the session and roughly 1% lower over the past five trading days. The decline came as hedge fund manager Bill Ackman fully exited his position in the Google parent company to fund a new stake in Microsoft, according to a Reuters report.
Ackman, who leads Pershing Square Capital Management, stated on Saturday that selling Alphabet was "not a bet against the company" and that he remains "very bullish long term." The move, executed in the second quarter, has raised questions among investors about whether large funds are rotating among megacap AI stocks or simply cashing out gains.
Alphabet's Class A shares reached a 52-week high of $403.70 on Wednesday before retreating. The stock now trades near the top of its $162.00-to-$403.70 range over the past year, reflecting a substantial recovery from earlier lows.
In a separate development, Alphabet raised 576.5 billion yen, or approximately $3.6 billion, through its first-ever yen-denominated bond sale. Reuters noted this is the largest yen bond issuance by a foreign company to date. The proceeds will help fund Alphabet's ambitious AI infrastructure plans, with capital spending on data centers and custom chips potentially reaching $190 billion this year.
The company's first-quarter earnings, released in April, provided a bright spot. Revenue climbed 22% year over year to $109.9 billion, driven by a 63% surge in Google Cloud revenue to $20.0 billion. CEO Sundar Pichai emphasized that "AI investments and full stack approach are lighting up every part of the business." The cloud backlog nearly doubled, exceeding $460 billion in contracted but unbilled work.
During the earnings call, Pichai noted that "enterprise AI solutions have become our primary growth driver for cloud for the first time." Thomas Monteiro, senior analyst at Investing.com, commented that the revenue trajectory suggests Alphabet's $180 billion capital expenditure plan is "well within the company's spending power." Forrester principal analyst Lee Sustar added that Google Cloud "can significantly contribute" to Alphabet's broader portfolio after years of losses.
Despite its strong growth, Google Cloud remains in third place globally behind Amazon Web Services and Microsoft Azure. However, its 63% quarterly expansion outpaced AWS's 28% and Azure's 40%. Alphabet now offers its custom tensor processing units (TPUs) directly to some customers, positioning itself as a competitor to Nvidia's graphics processors in the AI chip market.
The broader tech sector struggled on Friday, with the Nasdaq Composite falling 1.54% to 26,225.15, ending a six-week winning streak. The S&P 500 dropped 1.24% but still managed to post its seventh consecutive weekly gain. Reuters attributed the selloff to rising bond yields and inflation concerns following a strong AI-driven rally.
Looking ahead, Google I/O, Alphabet's annual developer conference, is scheduled for May 19-20 and is expected to unveil updates on AI, Android, Chrome, Cloud, and Gemini. Nvidia's earnings are due on Wednesday, with analysts watching for signs of sustained AI demand and consumer spending. However, risks remain: growth stocks with high valuations are vulnerable if bond yields continue to climb, and investors are questioning whether the massive spending on AI infrastructure will pay off quickly enough. Alphabet also faces regulatory scrutiny, as CEOs of Meta, Alphabet, TikTok, and Snap have been summoned to testify on online child safety, while lawsuits allege that social platforms harm minors' mental health.
