NEW YORK, May 24, 2026, 10:03 (EDT)
Alphabet Inc. shares fell Friday heading into the Memorial Day break, putting the stock on the back foot. Wall Street finished the week higher, but pressure stayed on the Google parent as investors questioned if its AI spending can still support the stock’s high valuation.
Alphabet’s Class A shares slipped 1.21% to $382.97 at Friday’s close. Class C shares finished at $379.38, down 1.07%. The Class A shares gave up around 3.5% for the week, after hitting an intraday high of $408.61 on May 18.
Markets in the U.S. are shut Monday, May 25 for Memorial Day, Nasdaq says, so traders have to wait until Tuesday to react to a packed week for Alphabet.
The main indexes mostly rose Friday, while Alphabet lagged. The S&P 500 closed up 0.37%, the Nasdaq Composite was up 0.19%, and the Dow set a new record. The S&P logged its eighth weekly gain in a row, according to Reuters.
Alphabet is out of the Russell 1000 Value Index after FTSE Russell shifted the company to a 100% Growth tag in its preliminary reconstitution for June 2026. The index tweaks, which many funds follow, go into effect after the U.S. close on June 26. FTSE Russell will release updates on May 29, June 5, June 12 and June 18.
It’s not just a label. FTSE Russell put Nvidia at number one and Alphabet second in terms of total company market value for the Russell U.S. indexes, using numbers from April 30. About $12.2 trillion in investor assets are tied to or follow products that use those indexes, FTSE Russell said. Alphabet’s rank-day market value was $4.66 trillion, according to FTSE Russell.
Catherine Yoshimoto, director of product management for the Russell U.S. Indexes at FTSE Russell, said the market’s broadening is “still being supported by technology and AI-driven momentum.” That’s part of Alphabet’s situation—and its draw. It’s getting seen less as a cheap mega-cap, more as a straight-up growth name. LSEG
Google talked up AI at its I/O developer conference this week. Reuters said the company put AI agents into Search and rolled out Gemini 3.5 Flash, its speedier, lower-cost AI model for some enterprise buyers.
Google CEO Sundar Pichai told Reuters, “When people use our AI-powered features in Search, they use Search more.” That line hits at Alphabet’s big question—does AI help defend Google’s search ad business, or start to chip away at users’ habit of clicking through results? Reuters
Alphabet’s cloud business is also driving the trade. Google Cloud brought in $20 billion in first-quarter revenue, up 63%, according to Reuters. The company also upped its 2026 capital expenditure outlook to $180 billion-$190 billion. Capex refers to spending on assets like data centers and chips.
Stephanie Link, chief investment strategist at Hightower Advisors, told Reuters this month that Alphabet is drawing attention on hyperscaler capex and “early signs of better monetization.” Hyperscalers are the largest cloud-computing firms, known for big spending on data centers and computing power. Reuters
Google at I/O pitched its AI tools for businesses, moving to counter rivals OpenAI and Anthropic. Alphabet’s market capitalization is now so close to Nvidia’s that any new data-center spending is seen as both a possible win and new overhead for investors.
But the trade looks messy. Google on Friday filed an appeal against a Washington federal judge’s decision that says it runs illegal monopolies in online search and advertising; Reuters said one possible fix could have Google sharing search data with rivals, maybe even AI players like OpenAI. Large AI spend also tightens the margin for error if Search or Cloud growth slips.
Google DeepMind chief Demis Hassabis said this is a time of “immense promise” and “enormous responsibility,” according to Reuters. For Alphabet holders, it’s more about whether Friday’s drop signals a breather in an AI-fueled rally or the start of tougher questions on spending, regulation and passive flows. Reuters
