Alphabet (GOOGL) stock is struggling for direction Tuesday after a U.S. federal judge ruled Monday that Google has unlawfully maintained a monopoly in search and text advertising. Shares of Alphabet, which owns the search engine, were last seen marginally higher after sinking more than 4% in Monday's market meltdown.
"After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly," wrote Judge Amit Mehta of the U.S. District Court for the District of Columbia in his ruling.
The suit was originally filed in 2020 and the ruling is the first anti-monopoly decision against a technology company in decades, according to CNBC. The ruling focused on Google's exclusive search arrangements with Android and Apple smart devices, which "helped to cement Google's anticompetitive behavior and dominance over the search markets," it added.
Sign up for Kiplinger’s Free E-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.
"This victory against Google is an historic win for the American people," said U.S. Attorney General Merrick Garland in a statement. "No company – no matter how large or influential – is above the law. The Justice Department will continue to vigorously enforce our antitrust laws."
Alphabet does not agree with the court's decision.
"This decision recognizes that Google offers the best search engine, but concludes that we shouldn't be allowed to make it easily available," said Alphabet President of Global Affairs Kent Walker in a statement, adding that the company will appeal the decision.
What should Alphabet investors make of the Google ruling?
Alphabet has kept up the pace on the price charts relative to its fellow Magnificent 7 stocks. For the year to date, GOOGL stock is up more than 14%. And Wall Street thinks the communication services stock has more room to run.
According to S&P Global Market Intelligence, the average analyst target price for GOOGL stock is $205, representing implied upside of nearly 30% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm Needham is one of the more bullish outfits on GOOGL stock with a Buy rating and $210 price target.
"GOOGL is our top large-cap stock pick for 2024, owing to a stronger macro backdrop, record political ad spending, data advantages, and Generative AI integrations (which lowers operational expenditures and drive revenue upside)," says Needham analyst Laura Martin.
As for the antitrust ruling against Google, Martin says that "investors anticipated this outcome" and anticipates a "minimal near-term impact" on the stock. "We believe consumers give Google Search its monopoly, so even without its exclusive contracts, consumers will download the Google app and its Search market share won't change materially," she adds.
Related Content
-
Don’t Miss Apple and Walmart Back-to-School Tax-Free Holiday Savings this SummerSales Tax Select states host sales tax holidays during the summer. Here’s what you can purchase.
-
The Rule of Retirement InversionThe rule of retirement inversion says that to have a great retirement, you must ask yourself what would ruin a great retirement — and then plan to avoid it.
-
How Divorced Retirees Can Maximize Their Social Security Benefits: A Case StudySusan discovered several years after she filed for Social Security that she is eligible to receive benefits based on her ex-spouse's earnings record. This case study explains how her new benefits are calculated and what her steps are to claim some of the money she missed.
-
From Piggy Banks to Portfolios: A Financial Planner's Guide to Talking to Your Kids About Money at Every AgeFrom toddlers to young adults, all kids can benefit from open conversations with their parents about spending and saving. Here's what to talk about — and when.
-
I'm an Investment Pro: Here's How Alternatives Could Inject Stability and Growth Into Your PortfolioAlternative investments can often avoid the impact of volatility, counterbalancing the ups and downs of stocks and bonds during times of market stress.
-
Dow Bleeds Red Due to Big Blue: Stock Market TodaySix of the official GICS sectors were in the green, led by communications services, technology and energy stocks.
-
July Fed Meeting: Live Updates and CommentaryThe July Fed meeting could be a lively economic event, with Wall Street keyed into what Fed Chair Powell has to say about interest rates and President Trump.
-
A Contrarian Approach Pays Off for This Small-Cap FundSmall-cap stocks have been hit hard by tariff worries, but this T. Rowe Price fund has outperformed thanks to its manager's against-the-tide approach.
-
A Financial Planner's Guide to Unlocking the Power of a 529 Plan529 plans are still the gold standard for saving for college, especially for affluent families, though they are most effective when combined with other financial tools for a comprehensive strategy.
-
An Investment Strategist Takes a Practical Look at Alternative InvestmentsAlternatives can play an important role in a portfolio by offering different exposures and goals, but investors should carefully consider their complexity, costs, taxes and liquidity. Here's an alts primer.
