Alphabet (NASDAQ: GOOGL) stock could be gearing up for a major correction, according to technical indicators, despite likely support from recent gains.
In this line, GOOGL stock has shown strength in recent sessions, trading at $379 at the close of the last session, up almost 10% over the past week. On the monthly timeline, the technology giant has rallied nearly 30%.
Alphabet stock outlook
Regarding the stock price outlook, insights from TradingShot, shared in a TradingView post on May 4, suggested the GOOGL shares could crash by more than 40% in the coming months.
The analysis focused on Google’s 12-year upward trading channel, which has guided the company’s share price higher since its initial public offering.
After a sharp rally in April, the stock moved close to the channel’s upper boundary for the first time since late 2021, shortly before the 2022 bear market decline.
The setup also mirrors previous downturns, including the 2020 COVID-19 crash and the 2025 tariffs-driven flash crash, when the stock eventually found support near its 200-week moving average.
TradingShot noted that the current monthly relative strength index resembles the topping pattern seen in November 2021 before Google stock lost nearly 45% of its value.
The analysis also highlighted recurring momentum cycles, with the 41.50 relative strength index level previously marking major buying opportunities in 2015 and 2022.
According to the projection, Google stock could climb toward the $410 to $420 range before weakening around early December 2026 as it tests the upper boundary of the long-term channel.
A monthly close below the 50-week moving average would strengthen the bearish outlook and signal the start of another major downtrend. If the projected decline occurs, TradingShot expects the stock could fall roughly 45% toward $225, potentially creating another long-term buying opportunity.
Indeed, the technical warning comes despite Alphabet shares surging after a strong first-quarter earnings report.
Alphabet stock fundamentals
The company reported Q1 2026 revenue of $109.9 billion, up 22% year over year and above Wall Street expectations. Adjusted earnings per share jumped to $5.11 from forecasts of about $2.62, while net income rose 81% to $62.6 billion.
Google Cloud was the standout segment, generating $20 billion in revenue, up 63% year over year. Operating margins nearly doubled to 32.9%, producing $6.6 billion in operating income, while the cloud backlog expanded to more than $460 billion as demand for AI infrastructure continued to outpace supply.
CEO Sundar Pichai said enterprise AI solutions became the company’s primary cloud growth driver for the first time in Q1. AI-powered improvements also strengthened Google Search and YouTube, easing concerns that generative AI could disrupt advertising revenue.
