Ian King
Chief Strategist, Strategic Fortunes
Alphabet's Breakout Potential: From Laggard to AI Leader
Written by Ryan Hasson. Published 8/22/2025.
Key Points
- GOOGL has rallied more than 42% off its lows, delivered strong Q2 earnings, and is outperforming both peers and the broader market in recent months.
- An impressive nuclear energy deal to power data centers and a $10B AI cloud partnership with Meta highlight Alphabet’s positioning as a leader in AI scalability and sustainability.
- With GOOGL reclaiming key resistance levels and building relative strength, a breakout above $207.50 could pave the way for fresh highs.
Alphabet (NASDAQ: GOOGL) hasn't enjoyed the same spotlight as its Magnificent Seven peers for much of this year. While the broader market and other mega-cap tech names sprinted ahead in the first half, GOOGL lagged. But the tide now appears to be shifting.
The stock is up more than 42% from its 52-week low, delivered better-than-expected Q2 earnings, and is posting stronger relative strength. Over the past quarter, GOOGL has climbed over 18%, outpacing many of its peers and the broader market. Perhaps most tellingly, on Thursday it was the only Magnificent Seven stock to close in positive territory—a clear sign of emerging leadership.
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Despite being only up 5.5% year-to-date, the recent acceleration, combined with a steady stream of catalysts, suggests Alphabet may transition from laggard to leader in the second half of the year. Not only has GOOGL staged an impressive comeback, but it's also building a vertically integrated AI infrastructure pipeline that could reignite optimism on the street.
A Nuclear-Powered Future for AI
One of the most significant developments has been Alphabet's bold push into nuclear power for its data centers. In a first-of-its-kind agreement, Alphabet, Kairos Power, and the Tennessee Valley Authority (TVA) will collaborate to supply 50 megawatts of nuclear power from a next-generation GEN IV reactor to data centers in Tennessee and Alabama. This deal makes TVA the first utility to purchase power from Kairos's Hermes 2 plant and marks the facility's maiden deployment.
The agreement is more than a short-term solution. Under a broader deal, Kairos will deliver up to 500 megawatts of nuclear energy to Alphabet by 2035, with the Hermes 2 facility ramping up to 50 megawatts in 2030. For Alphabet, this underscores its commitment to sourcing reliable, clean, and scalable energy for its expanding AI workloads. As AI data centers consume vast amounts of power, this partnership addresses growing energy demands while positioning Alphabet as a leader in sustainable infrastructure innovation.
A $10 Billion AI Cloud Deal With Meta
Another catalyst boosting momentum—and partly explaining GOOGL's relative strength on Thursday—was news of a landmark six-year cloud services deal between Meta Platforms (NASDAQ: META) and Alphabet. Valued at $10 billion, the agreement will see Meta tapping Google Cloud's infrastructure for its AI workloads and related services.
This contract is significant on multiple fronts. It highlights the surging demand for Google Cloud as AI adoption accelerates across industries, and it underscores Google's strategic importance in the broader AI ecosystem. By partnering with a rival mega-cap, Alphabet not only secures a lucrative revenue stream but also cements its role as a critical enabler of generative AI innovation.
Cloud remains a key growth engine for Alphabet. With deals of this magnitude, the segment could play an even larger role in driving top-line expansion in the years ahead.
Technicals Point to More Upside
From a technical standpoint, GOOGL's chart is beginning to flash bullish signals.
After trading sideways for much of the year, the stock has reclaimed its late-2024 channel between $190 and $200.
It briefly pushed above $200 before pulling back, but instead of breaking down, it appears to be forming a higher low within this emerging uptrend.
If Alphabet can sustain a move above $200 and maintain relative strength versus the broader market, it would set the stage for another leg higher. A break above its 52-week high of $207.50 could open the door to fresh peaks, particularly if the steady drumbeat of positive news continues.
Combined with strong Q2 earnings, easing regulatory concerns, and consistent momentum, Alphabet looks well-positioned—both technically and fundamentally—to lead the next leg of the AI-driven market rally.
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