EU Scrutiny of AI Data Practices Weighs on Alphabet Shares

Alphabet Inc., the parent company of Google, is facing renewed investor caution following a period of strong performance. The shift in sentiment is not driven by disappointing earnings but by fresh regulatory concerns emanating from Brussels, prompting a wave of profit-taking in the stock.

The immediate catalyst for the pullback is a formal investigation launched by the European Commission. Regulators are examining whether Alphabet utilized content from web publishers and its YouTube platform to train its latest artificial intelligence model, Gemini 3, without securing proper permissions or providing adequate compensation.

This probe strikes at a core strategic concern. The company had recently benefited from the successful rollout of Gemini 3 and a lucrative cloud infrastructure contract with NATO. Market observers now worry that a protracted investigation could result not only in substantial fines but also force a fundamental restructuring of how Google sources data for AI development. Such an outcome would threaten a key competitive advantage for the tech giant.

Should investors sell immediately? Or is it worth buying Alphabet?

A Pause in the Rally

The market mood is transitioning from a "fear of missing out" (FOMO) to heightened vigilance. Alphabet had been a notable outperformer in recent weeks, gaining ground against competitors through Gemini 3 and its strategic independence via proprietary chips. Although the share price, closing at 272.65 euros, remains up a significant 47.68 percent year-to-date, it has retreated slightly from its recent 52-week high of 279.70 euros.

From a technical perspective, the decline suggests a consolidation phase. The stock maintains a comfortable buffer of approximately 10 percent above its 50-day moving average, confirming the broader upward trend. Nevertheless, the investor reaction underscores the tech sector's continued sensitivity to regulatory interventions from the EU, which has a history of levying multibillion-euro penalties against large technology firms.

Fundamentals and the Federal Reserve

Despite the regulatory headwinds, Alphabet's underlying business fundamentals remain solid, supported by strong third-quarter revenue growth and an expanding cloud division. In the near term, investor focus is shifting toward the upcoming interest rate decision from the U.S. Federal Reserve. A positive outlook on monetary policy could help overshadow specific concerns regarding the EU investigation and provide fresh momentum for the broader technology sector.