Alphabet drops 4% on EU data order, Gemini delay despite Buffett stake

Alphabet stock slid over 4% to near $353 on July 17, erasing most of a rally that had pushed shares above $370 days earlier following Warren Buffett's public endorsement of the company. The decline was triggered by two major headwinds: the European Union's Digital Markets Act order and news of delays in Alphabet's next flagship AI model.

On Thursday, July 16, the European Commission ordered Google to open 11 Android features to rival AI assistants and to share anonymized Search data with competitors, including OpenAI. Under the Digital Markets Act, Search data sharing is to begin in January 2027, while Android changes take effect with the next major Android version in July 2027. Google objected to the order, with a company statement warning that "Europeans' private searches would be exposed to unfamiliar companies, without adequate anonymization of the data and without user knowledge or consent. This would weaken citizens' privacy, risk business trade secrets, and endanger national security." The EU is also expected to issue Google a fine in a related Digital Markets Act investigation within days, marking a second regulatory action in short order. Additionally, US antitrust litigation over Google's search dominance is drawing fresh institutional attention.

The regulatory pressure arrives as Alphabet confronts internal challenges with its AI roadmap. CEO Sundar Pichai had signaled a June launch for Gemini 3.5 Pro, the company's next flagship AI model, but the company is now reportedly facing delays. Engineers are said to still be working on coding performance, and some researchers worry that rival AI models now outperform Gemini on enterprise benchmarks. This stumble on the product front compounds concerns about Alphabet's capital intensity: the company is guiding to $180 billion（約29兆円） to $190 billion（約30兆円） in capital spending this year alone, a figure that has forced it to reverse its buyback strategy and prompted an $80 billion（約13兆円） equity raise, which Berkshire Hathaway helped anchor.

Wall Street remains focused on whether the AI buildout will translate into revenue. Wall Street expects Alphabet to post second-quarter earnings per share near $2.86, up nearly 24% year over year, when it announces results on July 22. Google Cloud, the division most closely associated with AI monetization, grew 63% last quarter to nearly $20 billion（約3.2兆円）. That figure is what investors will watch most closely for evidence that AI spending is converting into sustainable revenue growth, especially after Alphabet's earnings reaction last quarter exceeded those of its rivals. Against this backdrop, Warren Buffett's endorsement stands out: speaking with CNBC's Becky Quick, the Berkshire Hathaway chairman confirmed he built the position (Greg Abel did not initiate the trade, he clarified). Berkshire's stake now tops $31 billion（約5兆円）, ranking behind only Apple and American Express among its holdings. However, Buffett tempered his praise: he said Alphabet is not among his four or five favorite Berkshire-owned businesses, and he flagged the same capital intensity worrying the broader market, calling the AI spending race "real money." His comments echoed caution about chasing near-term results over real returns.

Alphabet faces a rare convergence of pressures—regulatory, competitive, and financial—that has shaken investor confidence even as Warren Buffett made a public bet on the company. The EU's Digital Markets Act order, delivered July 16, mandates that Google expose both Search data and Android system features to competitors including OpenAI, a shift that strikes at the heart of Google's moat in search and mobile ecosystems. Although the compliance deadline is still 12–18 months away, the ruling signals that regulators are willing to act and may do so again; a second EU fine in a related Digital Markets Act probe could arrive within days, and US antitrust litigation over Google's search dominance is also drawing fresh institutional attention.

Simultaneously, Alphabet is burning capital at an unprecedented pace—$180 billion（約29兆円） to $190 billion（約30兆円） in capital spending this year—while its signature next-generation AI model, Gemini 3.5 Pro, reportedly faces delays and engineering challenges. The buildout has forced the company to halt share buybacks and raise $80 billion（約13兆円） in equity (anchored by Berkshire), yet the connection between that spending and revenue growth remains unproven. Google Cloud did grow 63% last quarter to nearly $20 billion（約3.2兆円）, which Wall Street will scrutinize for proof that AI investment is monetizing, but that metric alone may not satisfy skeptics worried that Alphabet is chasing near-term AI headlines at the expense of disciplined returns.

Buffett's endorsement—and his caution—encapsulates the market's ambivalence. He confirmed Berkshire built a $31 billion（約5兆円） position, but stopped short of ranking Alphabet among his four or five favorite holdings, and he explicitly echoed market concerns about the "real money" being spent on AI. His measured stance suggests that even a long-term value investor sees Alphabet as a bet on execution under pressure, not a straightforward endorsement of the company's strategic direction.

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