Alphabet (GOOGL) Earnings Preview: Key Levels and AI Spending in Focus

Alphabet is set to report earnings tomorrow, with investors keenly watching its AI investment plans and advertising growth outlook. As four out of the seven "Magnificent Seven" tech giants have already released their earnings, all eyes are on Alphabet to gauge its trajectory for the year.

Alphabet Stock Analysis: Trading Near All-Time Highs

On the weekly chart, Alphabet shares are hovering around record highs, testing resistance along the upper trendline of a rising wedge pattern. This positioning means there is little room for error in the earnings release, as technical resistance above current levels is limited, making post-earnings price action harder to predict.

Key Levels to Watch: Resistance and Support

• $200 per share – A crucial psychological level that has acted as a pivot this year. If Alphabet holds this level post-earnings, it could pave the way for further gradual upside movement.
• Support at $188-$190 – This range has served as a strong base throughout January. A break below this zone could lead to a deeper correction.
• Next support zone at $177-$180 – Traders may look to this level for a secondary support test.
• Bearish scenario: Drop to $170 – A breakdown below these levels could see Alphabet retrace towards the lower trendline of the rising wedge, marking a 14% pullback, which may attract long-term investors looking for a better entry point.

Analyst Ratings and Price Targets

According to TipRanks, Alphabet has 29 analyst ratings ahead of earnings:

• 21 Buy ratings
• 8 Hold ratings
• 12-month average price target: $219 (a modest 7% upside from current levels)

Given this limited upside potential, some investors may opt for profit-taking before earnings, anticipating a potential pullback to re-enter at a lower price.

MACD and Market Sentiment

The MACD indicator is approaching overbought territory, but historical price action suggests room for further gains before becoming excessively overbought. This leaves Alphabet stock with some momentum heading into earnings, but caution is warranted.

Final Thoughts: High Expectations, Limited Margin for Error

With Alphabet stock trading near record highs, AI spending, advertising revenue growth, and earnings guidance will be key drivers of market reaction. While the technical setup suggests caution, strong earnings could fuel a continuation of its bullish trend. However, any disappointment could trigger profit-taking and a potential retest of key support levels.