Alphabet's Crossroads: Why Two Notable Investors See Storm Clouds Ahead

In the ever-evolving tech landscape, few companies have reigned as long or as dominantly as Alphabet, the parent of Google. Yet in 2025, a growing chorus of skeptics warns that the firm’s golden era may be nearing its twilight. Among them are prominent investors Josh Brown and Joe Terranova, whose bearish outlooks on Alphabet’s stock—rooted in structural threats to its core business—highlight a pivotal inflection point for the company. This article dissects their arguments, technical signals, and broader market dynamics to assess whether Alphabet’s decline is a temporary stumble or a harbinger of lasting decline.

The Bearish Case: Foundational Shifts in Search and AI

Josh Brown of Ritholtz Wealth Management recently unloaded his entire stake in Alphabet, calling Apple’s decision to explore AI-powered search options in Safari a “watershed moment.” His thesis hinges on two critical shifts:
1. Erosion of the Ad Duopoly: Alphabet’s search business, which generates 70–80% of its revenue, faces unprecedented competition. Apple’s move to integrate AI-driven alternatives into its browser threatens to divert traffic from Google, undermining the firm’s advertising dominance. Brown argues that Alphabet is now “competing in core search” for the first time, a fight it may not win.
2. AI’s Disruptive Power: While Alphabet invests heavily in AI (e.g., the Gemini language model), rivals like OpenAI and NVIDIA are accelerating ahead. Startups and tech giants are building tools that bypass Google’s search engine entirely, offering direct answers via AI models. Brown dismisses Alphabet’s cloud growth as insufficient to offset these risks, noting that its $12.26 billion cloud revenue (up 28% YoY) still trails Amazon and Microsoft.

Joe Terranova of Virtus Investment Partners echoes these concerns, calling Apple’s Safari pivot “a really big deal fundamentally.” He emphasizes that Alphabet’s “cash cow” search business is now vulnerable to both tech shifts and regulatory scrutiny. The latter includes antitrust lawsuits that could force Alphabet to spin off Chrome or face fines tied to its $20 billion annual payment to Apple for default search placement. Terranova warns that Alphabet’s stock could underperform as investors flock to pure-play AI stocks, which he believes offer faster returns.

Technical Indicators: A Bearish Breakdown

The technicals corroborate the bears’ pessimism. In May 2025, Alphabet’s stock fell 7% to ~$151, piercing a “rising wedge” pattern—a bearish formation signaling downward momentum.
- Support Levels: Key supports at $141 (horizontal support from late 2023) and $131 (near the 200-day moving average) face tests.
- Resistance: Overhead resistance at $165 and $182 suggests limited upside.
- RSI Signal: The Relative Strength Index (RSI) dropped below 50 in May, with 69% of technical indicators signaling a “sell.”

Earnings and Valuation: A Glass Half Empty

Despite a 12% revenue rise to $90.2 billion in Q1 2025, Alphabet’s Zacks Rank remains a cautious “Hold.” Analysts note flat EPS estimates and muted investor optimism:
- Valuation Metrics: Alphabet’s P/E and P/S ratios score a “C” versus peers, suggesting fair value but no catalyst for short-term gains.
- Margin Pressures: Google Cloud’s margin improved to 17.8%, but ad revenue growth slowed amid macroeconomic headwinds. The $32 billion Wiz acquisition—a bid to boost cloud security—adds execution risk.

Sector-Wide Pressures: Apple’s Sword of Damocles

Alphabet’s $20 billion annual payment to Apple for Safari’s default search slot is now under existential threat. If Apple adopts AI-driven alternatives, Alphabet’s ad revenue could suffer a direct blow. Meanwhile, competitors like NVIDIA and Microsoft are integrating AI tools into their ecosystems, further sidelining Google’s traditional search model.

The Contradictions: Bulls vs. Bears in 2025

Analysts remain divided. While 42 “Strong Buy” ratings suggest long-term optimism, short-term risks dominate:
- Bearish Forecasts: Some predict a dip to $115, though most view this as overly pessimistic.
- Long-Term Potential: The $240 “street-high” target hinges on Alphabet’s AI investments paying off. However, execution remains unproven.

Conclusion: A Stock at a Tipping Point

Alphabet’s 2025 stumble reflects deeper vulnerabilities. Its search business, once a near-monopoly, now faces AI-driven competition, regulatory overhang, and technical breakdowns. Josh Brown and Joe Terranova’s bearish stance is grounded in hard data:
- Alphabet’s stock had slumped 14.5% YTD through early 2025, underperforming the S&P 500 by 13 percentage points.
- Apple’s Safari move alone could cost Alphabet billions in ad revenue, while AI rivals erode its moat.
- Technical indicators, like the breached rising wedge and RSI below 50, suggest further downside unless catalysts emerge.

Yet bulls argue that Alphabet’s AI investments and cloud growth could eventually turn the tide. The question remains: Is this a temporary setback, or a permanent decline? For now, the bears hold the stronger hand. Investors weighing Alphabet must confront a stark truth: the era of easy dominance is over. The next chapter will be written in AI’s language, and Alphabet must prove it can still speak it fluently.