Google’s Stock Fell 5% On Monday; The Drivers Behind Its Share Price Will Surprise You

Shares of Google's parent company, Alphabet, ended over 5% lower on Monday as investors reacted to two of the company's top AI researchers departing for other firms. The fall came even as Google's profits are accelerating almost four times faster, according to Inc.

On a forward earnings basis, Google's stock is 22% cheaper than Apple currently. The tech giant was regarded as a safe haven stock among the Magnificent Seven stock. Now, things have changed for Google.

Google's price action points towards a $180 billion to $190 billion 2026 capex guide, which has left investors unsettled. First quarter free cash flow fell 47% to $10.1 billion.

The tech giant remains dominant with businesses like YouTube and Google Search. But the departure of Noam Shazeer and John Jumper highlight something deeper.

Jumper left for Anthropic while Shazeer will join OpenAI less than two years after Google paid $2.7 billion to bring him back into the fold.

Google has been losing its top technical talent for three years. Geoff Hinton quit in 2023. Mustafa Suleyman joined Microsoft in 2024. This hasn't stopped the tech giant from turning Gemini into a top AI model that can compete against OpenAI and Anthropic's products.

But, investors are now signaling that Apple's brand, even without a clear AI strategy, is worth more than Google's growth trajectory with its leading AI scientists.

Some believe that overspending could be the company's undoing, Inc. reported, as the firm's ambitious capex has not made it a more popular stock choice.

Investors remain concerned about AI-related spending at Google. The company has signaled that much of its planned spending of $180 billion to $190 billion in fiscal 2026 will be earmarked for AI compute and data centres.

Google and other US AI firms might also be facing pressure from open-source Chinese models. DeepSeek and z.AI are competing neck-and-neck with these companies in terms of capabilities, The NY Post reported. In many cases, they are far cheaper than many subscription-based American models.

Google's fall on Monday far outpaced the losses at rivals like Meta and Amazon, which fell about 2% and 4%, respectively.

The slide also came soon after a Wall Street Journal interview with Microsoft CEO Satya Nadella was released, as per CNBC. Nadella suggested that the US should avoid becoming dependent on just a few big AI models. He also outlined how e more low-cost AI models can be made available to customers.

If models become less expensive and more interchangeable, Nadella pointed out in his interview, investors could question whether that AI spending is a durable advantage or increasing pressure on profit margins.

For now, Google's stock is still a safe buy for investors. But the coming months and the company's decisions on several key sectors like AI spending, will direct how investors feel about its future.