Alphabet (GOOGL) shares are red-hot Wednesday after a federal judged ruled in the tech conglomerate's favor.
Specifically, U.S. District Judge Amit P. Mehta barred the company from signing exclusive search engine deals, but stopped short of requiring it to divest Google's Chrome browser.
While banning Alphabet from entering new deals, Mehta allowed the company to maintain current agreements, including one with Apple (AAPL) that allows Chrome to be the default search engine in its Safari browsers.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Last summer, Mehta ruled that Google had unlawfully maintained a monopoly in search and text advertising and that its distribution agreements were "exclusive and have anticompetitive effects."
And in November, Department of Justice officials expressed their support for forcing Google to sell Chrome.
But in his ruling on Tuesday, Mehta admitted that the marketplace is changing, due in part to the emergence of artificial intelligence (AI). "There are strong reasons not to jolt the system and to allow market forces to do the work," he wrote.
Still, the ruling requires that Google now share its Chrome search data with competitors.
"Today's decision recognizes how much the industry has changed through the advent of AI, which is giving people so many more ways to find information," Google said in a statement. "Now the Court has imposed limits on how we distribute Google services, and will require us to share Search data with rivals. We have concerns about how these requirements will impact our users and their privacy, and we're reviewing the decision closely. "
What does Wall Street say about Google stock?
Wall Street never seemed too worried about the antitrust case against Alphabet. Heading into Wednesday's session, GOOGL stock was up 30% year over year, nearly doubling the return of the broader S&P 500.
And of the 65 analysts tracking the communication services stock who are followed by S&P Global Market Intelligence, 54 say it's a Buy or Strong Buy, 11 have it at Hold and not a single one rates it at Sell. This works out to a high-conviction consensus Buy recommendation.
Wedbush analyst Scott Devitt is one of those with an Outperform (Buy) rating on GOOGL stock.
The outcome of the case "is broadly favorable for Google, in our view, with the court ruling against the most severe remedy proposals introduced by the DOJ," Devitt writes in a note to clients.
As for GOOGL stock, the analyst believes "there is a compelling case for multiple expansion in the coming quarters and the discount relative to peers is unwarranted."
Devitt notes that Tuesday's ruling eliminates a major overhang for Alphabet and that "management is repositioning the business as a winner in the AI space, with strong demand trends and an acceleration in Cloud growth."
The analyst adds that he is "increasingly constructive in the longer-term durability of Google's Search business," and lifted his price target to $245 from $225, representing implied upside of nearly 16% to GOOGL stock's September 2 close.
Related content
- If You'd Put $1,000 Into Google Stock 20 Years Ago, Here's What You'd Have Today
- What is AI Worth to the Economy?
- The Best Stocks of the Century
-
Retirement Road Trips with Your Dog or Cat: How to Keep Your Pet Safe and HappyHitting the road for a retirement adventure with your pet? Check out these tips to keep your furry friend happy and safe on the journey!
-
What to Do About These Three Medicare Changes During Open EnrollmentWith costs due to rise sharply next year, look for coverage that protects your wallet as well as your health.
-
Are You a Small Business Owner Buckling Under Economic Pressure? Here's How You Can CopeSignificant emotional and financial challenges, including tariff worries, are piling up on small business leaders. Here's how leaders can develop more healthy coping strategies and systems of support.
-
To Raise Prices or Not to Raise Prices: Tariff Tips for Small BusinessesSmall businesses are making critical decisions. Should they pass on higher costs due to tariffs, or would that only cost them more in lost customers?
-
Five Retirement Planning Traps You Can't Afford to Fall Into, From a Wealth AdviserTo help ensure you reach your savings goals and enjoy financial security in your golden years, be aware of these common pitfalls. The key is to be proactive, informed and flexible.
-
Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs InMany employer-sponsored plans offer limited investment options, which can stunt growth. But participants considering alternatives might need some sound advice to get the most from their accounts.
-
Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very LikelyConventional wisdom dictates that you save in a 401(k) now and pay taxes later, but turning that rule on its head could leave you far better off. A financial planner explains why.
-
More Retirees Are Renting: Should You? A Financial Adviser Weighs InIn some ways, renting is cheaper, more flexible and easier, but unless you understand the implications for your taxes and health costs, it might not be for you.
-
Dow Dives 878 Points on Trump's China Warning: Stock Market TodayThe main indexes erased early gains after President Trump said China is becoming "hostile" and threatened to cancel a meeting with President Xi.
-
I'm a Real Estate Investing Pro: This 1031 Exchange Strategy Can Triple Your Cash FlowSavvy investors can use 1031 exchanges to unlock value by moving capital across markets in a play called geographic arbitrage. These tax implications can make or break the strategy.
