Alphabet is learning the hardest lesson in Silicon Valley: once people decide you’re “the future,” the only place left to go is “slightly disappointing present.”
In a note that sounded less like financial analysis and more like a breakup text, Seeking Alpha analysts issued a rating downgrade under the title “Alphabet: Great Opportunities, But Let's Cool The Hype (Rating Downgrade)” (Seeking Alpha, Jan 2026). Translated from Wall Street to English: Google is still printing money, but not at a speed that justifies your cousin Dave taking out margin loans because “Larry Page built this for me.”
Investors, stunned to discover that Alphabet is a business and not a religion, briefly refreshed their GOOGL ticker in disbelief before returning to their regularly scheduled program: tweeting that the Nvidia chart “only goes up.”
The downgrade arrives after years of treating Alphabet like a tech piñata: no matter how many times Sundar Pichai got on stage and vaguely gestured at “AI everywhere,” everyone assumed infinite candy would spill out in the form of ad revenue, productivity tools, and at least one robot butler.
Instead, what they got was:
- An AI Overviews feature that confidently recommends glue on pizza.
- Gemini models that try to finish your emails and occasionally your career.
- A graveyard of messaging apps so extensive it now qualifies as a historical monument.
“We still believe in Alphabet’s long-term AI opportunity,” the note explains, “we just think expectations have gotten ahead of execution.” That’s finance-code for: “We thought this would be Skynet by now, but it’s still giving us recipe blogs and a 12-line snippet from Reddit.”
Sundar Pichai responded via internal memo, assuring employees that Alphabet is “just at the beginning of its AI journey,” which was widely interpreted as: “Remember when everyone laughed at Google+? Yeah, we do too, nightly.”
Market reaction was swift and deeply rational in the way only markets can be. A few highlights from the day after the downgrade:
- Retail traders on Reddit posted memes of a crying Google logo whispering “I still love you” to a green candlestick.
- One venture capitalist tweeted that Alphabet had “lost its product edge,” while sitting in a WeWork financed by a fund whose best exit was a scooter company.
- An ETF manager solemnly announced he was trimming his GOOGL position from 14.7% of his portfolio to 14.6%, citing “discipline.”
The fundamental problem is that Alphabet is trapped in the most dangerous place any tech giant can be: reality. Its core business—search and ads—is mature, profitable, and deeply boring to people who just watched a TikTok explaining how “AI will 10,000x everything by Thursday.”
“We wanted a rocket ship,” said one anonymous tech investor known only by his X handle, @AI_Options_King. “Instead, we got… a functioning global infrastructure company with defensible moats and strong cash flows. How is that supposed to go viral?”
The AI boom made things worse by convincing everyone that Alphabet, OpenAI, and Microsoft were all racing to plug the human race into a conversational spreadsheet. The problem: hype compounds faster than revenue. Somewhere between “ChatGPT wrote my homework” and “Gemini has thoughts on my Q4 OKRs,” the expectation quietly shifted from “cool tool” to “reinvent every industry, including mining and feelings.”
“We never said Alphabet was going to terraform Mars,” one analyst sighed on CNBC. “We just said its multiple implied it might.”
Inside Mountain View, the downgrade has reportedly triggered a new internal initiative known as Project Tempered Expectations. Leaked documents describe it as “a cross-functional effort to make everyone calm down a little.” Proposed tactics include:
- Replacing “moonshot” in all slide decks with “reasonably ambitious spreadsheet.”
- For every mention of “AGI” in a meeting, the presenter must also say “data center power bill.”
- Rebranding the infamous “Other Bets” division as “What If We Didn’t?”
Wall Street, however, remains addicted to narrative. In 2018, the story was “FAANG stocks will never die.” In 2021: “Everything is the metaverse.” In 2023: “AI replaces knowledge work, also please like and subscribe to my Substack.” Now, in 2026, the new macro thesis seems to be: “Sure, Alphabet is great, but have you seen this AI chip company with no revenue and a waitlist?”
“This downgrade isn’t about execution,” another portfolio manager explained while standing in front of a chart that looked suspiciously like every other chart. “It’s about rotation. We want to be early to the next overvalued thing, not the current one.”
In response, Alphabet’s product teams are reportedly exploring bold new ways to appear “underrated.” Experiments under consideration include:
- Secretly launching a new social network and immediately shutting it down so analysts can complain Alphabet “fails to capitalize on social.”
- Removing a beloved Gmail feature just to watch productivity Twitter flood the zone with unpaid brand impressions.
- Renaming Google Cloud to “Some Other Company’s Cloud” so its growth will finally be appreciated.
Veterans in the industry note that this isn’t Alphabet’s first time riding the hype-dot-comedown rollercoaster. Long before it became a holding company with a cool name and legal department, Google was just the weird search engine with a white page and no portal ads. People doubted it then too. They were wrong, but crucially: they were loud. Which is more important for markets.
“The cycle is always the same,” a former Googler explained. “First they ignore you. Then they hype you. Then they downgrade you because your planetary-scale infrastructure didn’t achieve sentience by earnings call. Then twenty years later, they realize you quietly owned the internet the whole time.”
For now, Alphabet will continue doing offensively sensible things: tweaking ad auctions, deploying Gemini into more products, and building data centers the size of small countries so that someone, somewhere, can ask “is it cake?” in 175 languages.
The only real question left is whether investors, having briefly “cooled the hype” on Alphabet, will learn anything from the experience.
Early indications suggest no. Within hours of the downgrade note, a new report was already trending:
“1 ‘Strong Buy’ AI Stock to Load Up on Before Reality Arrives.”
Alphabet, from its campus in Mountain View, quietly added the link to Chrome’s Safe Browsing list.