Alphabet Inc. (NASDAQ: GOOGL) is trading higher on Wednesday, gaining about 5% in just three days as the stock tests resistance levels that may signal a breakout. The uptrend suggests buyers are forcing shares higher, though the rally faces pauses at price ceilings where sell orders accumulate. Strategas chief chartist Todd Sohn previously identified Alphabet as having the "best chart" in big tech, a status supported by Morgan Stanley analyst Brian Nowak, who maintained an Overweight rating and raised the price target to $415 from $375.

Technical Divergence

Sohn highlighted a striking technical divergence in the technology sector, noting Alphabet's chart looks exceptionally strong compared to peers like Meta Platforms Inc. (NASDAQ: META) and Microsoft Corp. (NASDAQ: MSFT). While foundational tech icons show signs of exhaustion with flattening 200-day moving averages, Alphabet remains supported above longer-term trends. The stock's resilience is linked to massive capital expenditures for artificial intelligence infrastructure, similar to industrial breakout stars like GE Vernova Inc. (NYSE: GEV).

Resistance and Breakout Potential

Resistance occurs where sell orders fill buy demand, potentially ending a rally. Alphabet's chart shows resistance at levels that were previously support. In April, $374 was support; after breaking in early June, it became resistance as sellers sought breakeven exits. The same dynamic is now at $358, a former support level in early June that now acts as a ceiling due to buyers' remorse. A breakout, where the stock clears and holds above resistance, would indicate sellers are exhausted, potentially forcing buyers to outbid each other to maintain the uptrend.

Technical Indicators

As of the June 30 close at $353.33, GOOG’s technical profile remains mixed but stabilizing.

The stock trades below shorter-term moving averages but holds above longer-term trends. The neutral RSI suggests prior overbought conditions have eased, while the MACD indicates near-term momentum is slightly bearish but stabilizing. Year-to-date, GOOG shares have advanced 12.60%, despite a 6.14% decline over the last month.

Alphabet Inc.’s Google has reportedly limited Meta Platforms Inc.’s access to its Gemini AI models. This decision followed Meta’s request for more computing power than Google could offer, affecting Meta’s AI projects. Google informed Meta in March about the limitations, which have led to disruptions and delays in Meta’s internal AI initiatives, according to a report by the Financial Times. The restrictions continue to remain in place, prompting Meta to encourage its staff to optimize AI token usage.

Google Informed Meta In March About Limitations

Other Google clients have also faced similar restrictions, though to a lesser degree. Meta’s significant demand for Google’s models has made it particularly vulnerable to these constraints, one source noted, according to the report. Google’s move to cap access highlights the infrastructure challenges facing the AI industry. Despite substantial investments in technology, major companies like Google struggle to meet the growing demand for AI services. Google has recently secured additional capacity, including a $920 million monthly deal with SpaceX for computing resources.

Evolving Google-Meta Relationship

The relationship between Google and Meta has been evolving over the years, marked by significant collaborations and agreements. In August last year, Meta struck a $10 billion cloud pact with Google to bolster its AI capabilities, despite their competitive rivalry. In February, Meta agreed to a multi-year AI chip rental deal with Google, further solidifying their partnership. This arrangement allowed Meta to lease Google’s Tensor Processing Units to develop advanced AI models, showcasing Meta’s increased investment in AI technology.

Strategic Shifts at Meta

Meta has been using Gemini for automating safety processes and enhancing customer services. However, the company is now prioritizing its Muse Spark model to reduce reliance on external models. Earlier this month, Meta launched a new AI tool within Facebook Search, powered by its Muse Spark model, which is expected to potentially generate revenue of $10 billion annually.