Stock Prices Surge for Alphabet Following Google's Antitrust Decision: Crucial Facts Examined

In a significant development for tech giant Alphabet, U.S. District Judge Amit P. Mehta ruled in favour of the company on Wednesday, following a long-standing antitrust case. The ruling has brought a sense of regulatory clarity and optimism to the market, driving a surge in Alphabet's stock.

Judge Mehta's decision requires Google to share its Chrome search data with competitors, but it allows Alphabet to maintain current agreements, including its deal with Apple that makes Chrome the default search engine in Safari browsers. The ruling, however, bars Alphabet from entering new exclusive search engine deals.

The outcome of the case is broadly favourable for Google, according to Wedbush analyst Scott Devitt, who maintains an Outperform (Buy) rating on GOOGL stock. Devitt notes that Tuesday's ruling eliminates a major overhang for Alphabet. He also lifted his price target for GOOGL stock to $245 from $225, representing an implied upside of nearly 16% to the stock's September 2 close.

Devitt believes there is a compelling case for multiple expansion in the coming quarters for GOOGL stock. This optimistic view is shared by 54 out of 65 analysts tracking the communication services stock followed by S&P Global Market Intelligence, who rate it as a Buy or Strong Buy. Only 11 analysts have it at Hold, and none rate it at Sell.

The ruling acknowledges the changes in the industry due to the emergence of artificial intelligence (AI). Google has expressed concerns about how these requirements will impact its users and their privacy. However, the company's stock recently reached an all-time high, surpassing $3 trillion in market value for the first time. Shares rose around 4% to about $252 on Wednesday, following the court ruling.

The strong performance of GOOGL stock is evident in its year-over-year return, which stands at 30%. In September alone, the stock has gained nearly 15%, supported by favourable analyst revisions and the court rulings preserving key business contracts. The return of GOOGL stock nearly doubled the return of the broader S&P 500.

It's worth noting that Wall Street never seemed overly concerned about the antitrust case against Alphabet. The high-conviction consensus Buy recommendation from analysts underscores this sentiment. Despite the ongoing regulatory scrutiny, Alphabet's stock continues to attract investors, driven by its strong product development and strategic position in the AI sector.

In November, Department of Justice officials expressed their support for forcing Google to sell Chrome. However, Judge Mehta's ruling did not require Alphabet to divest Google's Chrome browser. This decision, along with the favourable court ruling, has provided a boost to Alphabet's stock, signalling a positive outlook for the company in the near future.

Stock Prices Surge for Alphabet Following Google's Antitrust Decision: Crucial Facts Examined