Alphabet Shares Won’t Drop 10% After Google I/O 2026

Alphabet just threw the biggest AI party in its history and the stock left early. I am still betting that 90 days after I/O 2026, GOOGL will not be trading at least 10% below its pre I/O close.

Scoring rules, so we are clear: take Alphabet’s official close on the last full trading day before the I/O keynote. On calendar day 90 after that, check the GOOGL close. If it is down 10% or more, this forecast is wrong. Anything better than that and it is a win for the not a meltdown camp.

The consensus panic: Google just broke its own ATM

The surface story writes itself. Google calls this “the biggest reinvention of the search box in 25 years,” stuffs generative answers and agents into the query bar, and then casually mentions it will spend $180 to $190 billion this year, mostly on AI infrastructure. During the keynote, the stock slides as Alphabet misses or brushes the low end of Wall Street’s hopes.

Add a delayed Gemini 3.5 Pro, some visible disappointment in the developer crowd, and a rising chorus of “Is AI a bubble?” opinion pieces, and the bearish script looks neat: margin crushing capex, a risky experiment with the ad machine that funds everything, and premium AI products that already need discounts.

If you are hunting for a clean excuse for a 10% repricing, this is catnip. The problem is that it is mostly vibes, not data, and vibes usually struggle to hold a double digit drawdown in a cash machine like Alphabet for a full quarter.

Why I do not see a 10% air pocket

A 10% drop that sticks for 90 days usually means one of two things. Either the company admits something structurally ugly about its economics, or the whole sector gets de rated and it underperforms its peers.

Alphabet has made life harder for itself, but it has not confessed to breaking the business. Yet.

1. The core ad engine is still the default

Google is not ripping out the old search results page and replacing it with a chatbot overnight. It is layering AI summaries and agents on top of a product that already throws off more free cash flow than most countries. Any early sign that AI answers are nuking ad revenue per query would be a real scare. So far we have disappointment and commentary, not CFOs waving red flags.

Over the next quarter, the most likely message is: we are experimenting, ad metrics are stable enough, please step away from the fire graphic. That caps the multiple. It does not usually vaporize 10% of the market cap for an entire quarter.

2. The $180 billion capex guide is terrifying, but likely framed as a bulge

The new capex guide is obscene. It is also exactly what Wall Street expects a serious AI player to say in 2026. The key is whether management keeps calling it a peak or quietly admits this is the new normal. Over this 90 day window, I expect cautious language that sounds like: this is a heavy build year, we will look for efficiencies, we feel good about returns.

That does not make anyone cheer, but it usually leads to model tweaks, not torches and pitchforks. For a 10% reset, you would need a slide that effectively says that this is now the base capex run rate and management has no clear view on when revenue catches up. That is a higher bar than the market is pretending.

3. Even if AI margins disappoint, the floor is high

Alphabet is diversifying hard into AI, but it is still Alphabet: Search and YouTube ads, Android, Cloud, Play. It has levers. It can slow parts of spend, lean on buybacks, and remind every fund manager in America that this is still a profit geyser with a strong balance sheet.

When macro AI bubble fear rises, the first victims are the thinly profitable stories with tickers that sound like marketing decks. Alphabet is the boring incumbent you hide in while you tell your investors you are being prudent.

4. Competitors force prices down, but they also share the blame

Google’s AI pricing is already bending under competitive pressure. The $250 Gemini Ultra plan became $200, and now there is a $100 tier for developers and creators. This is not a luxury margin profile. It is a volume play. But if OpenAI or others undercut further, that hurts everyone’s AI services margins, not just Google’s.

In a real AI de rating, it is easier for investors to shave the whole basket than single out the one company that still prints tens of billions in free cash flow. A sector wobble is plausible. Alphabet being uniquely punished by 10% or more, without a clear execution failure, is less so.

What could make me wrong

The risk list is not short. If you are looking for ways this column eats crow in August, start here:

• AI search bruises the ad model. If management is forced to admit that AI heavy results reduce ad load or click through rates in a way that shows up in revenue per search, the stock will not wait for a second opinion.
• Capex turns from spike to plateau. Any guidance that suggests $180 to $190 billion is not a spike but a floor will trigger real multiple compression.
• Gemini stumbles, publicly. A high profile safety failure in AI search, another hallucination fiasco, or a Gemini 3.5 Pro delay that confirms a real technical lag would fit the “Google is behind and burning cash to catch up” narrative perfectly.
• A broad AI unwind hits crowded mega caps. If AI as a theme gets repriced sharply, Alphabet might not escape, even if it looks better than the frothier names.

Any of these could push GOOGL through the 10% line temporarily. The specific call here is about the closing price on day 90. I am betting that either the bad news does not land that hard, or the sector damage is broad enough that Alphabet looks like the adult in the room, not the fall guy.

The 90 day stakes

This is not really a question about today’s stock tick. It is about whether investors decide, within one earnings cycle, that Google’s AI pivot is a disciplined renovation of the cash machine or a reckless remodel that punched through the load bearing wall.

If I am right and the stock holds within single digit distance of the pre I/O level, it will signal that Wall Street is annoyed about the bill but still believes in the house. High capex, messy pricing experiments, delayed models, and all.

If I am wrong and Alphabet ends the window 10% or more below that reference price, it will not just be a line on a chart. It will be the market saying that for the first time in decades, Google’s invincible search economics have a visible crack and the AI story is not big enough or clean enough to cover it.

My money, figurative and embarrassingly public, is on the first scenario. The consensus wants a dramatic AI comeuppance. The signal still looks like something duller: lower multiples, higher spending, a lot of Gemini slides, and a stock that mostly drifts sideways while everyone waits for numbers instead of demos.

In other words, expect 90 days of people on TV calling this the end of the Google era, and a share price that keeps rudely acting like the era is on auto renew.