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Yahoo
28-07-2025
- Business
- Yahoo
Alphabet's Legal Woes May Create Buying Opportunity: Analyst
Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) is navigating a pivotal period marked by accelerating business fundamentals, robust advertising performance, and strong leadership in AI and cloud computing, even as a critical antitrust ruling looms. The upcoming decision from Judge Amit Mehta in the U.S. Department of Justice's search antitrust case, expected by August 8, 2025, could reshape the company's operational landscape, though the long-term implications are viewed as manageable. Despite the shadow of regulatory uncertainty, Alphabet's core growth engines and aggressive AI initiatives signal sustained strength, as underscored by J.P. Morgan analyst Doug Monday, Anmuth reiterated an Overweight rating on Alphabet with a price forecast of $232, citing accelerating fundamentals, resilient advertising performance, and the company's long-term leadership in both artificial intelligence and cloud computing. Anmuth supported the rerating by the company's accelerating fundamentals, resilient advertising performance, and long-term leadership in artificial intelligence and cloud computing. While regulatory uncertainty continues to dominate investor sentiment, particularly surrounding the U.S. Department of Justice's ongoing antitrust case over Alphabet's search business, the analyst believes the risks are manageable and potentially over-discounted in the stock's valuation. He noted that investor attention is now centered on Judge Amit Mehta's upcoming decision on remedies in the search antitrust case, which is expected no later than August 8, 2025. While the exact nature of the remedy remains unclear, Anmuth believes the most likely outcome would involve a prohibition on exclusionary practices and exclusive preloading of Google Search across major access points such as Apple (NASDAQ:AAPL) devices, Android smartphones, third-party browsers, and Chrome in the United States. More punitive measures, such as banning all distribution payments, forcing a Chrome divestiture, restricting AI programs, or enforcing extended remedy durations, are considered less probable but remain on the table, per the analyst. Regardless of the outcome, Alphabet is expected to appeal both the August 2024 monopoly ruling and any associated remedies, potentially extending the regulatory process by 1.5 to 2.5 years based on historical precedent, such as the Microsoft (NASDAQ:MSFT) case, he noted. From a financial perspective, Anmuth projects that Alphabet could face a 5% to 10% headwind to GAAP EPS in 2026 if stricter remedies are enforced. The most exposed segments include U.S. Search & Other revenue, which the analyst estimates will reach $86 billion in 2026, accounting for roughly 78% of Alphabet's U.S. S&O segment, 35% of global S&O revenue, and 19% of total company revenue. He noted that related U.S. traffic acquisition costs (TAC) are expected to total $20 billion, or 18% of domestic S&O (Sales & Operations) revenue. Despite these risks, Anmuth considers Alphabet's second quarter a defining moment for the stock. He noted that Google Cloud revenue grew 32% year-over-year, significantly accelerating, while Search & Other revenue rose 11% excluding foreign exchange impacts. Excluding legal fees and one-time settlement costs, the company's operating margin expanded by approximately 150 basis points year-over-year, reflecting continued efficiency even amid a surge in AI-related capital expenditures, as per the analyst. Valuation remains a strong point, Anmuth noted. Alphabet shares are trading at roughly 18.3 times 2026 GAAP EPS and 16.3 times 2027 EPS, which the analyst sees as attractive given the company's growth prospects. For 2027, the analyst projects GAAP EPS of $11.89, which supports the firm's $232 price forecast based on a 19.5x multiple. Alphabet is ranked as the analyst's second-highest conviction pick behind (NASDAQ:AMZN), driven by several key tailwinds: sustained leadership in AI and generative search transition, healthy growth in core ad businesses such as Search and YouTube, accelerating demand and capacity expansion in Google Cloud, and improving margin performance despite increased capex and depreciation, he said. Ultimately, while the legal overhang introduces short-term uncertainty, Anmuth argues that Alphabet remains one of the strongest long-term opportunities in large-cap tech. Any remedy-driven weakness in the stock could offer investors a compelling entry point, especially if the final ruling proves less punitive than feared, as per the analyst. Price Action: GOOGL stock is down 0.74% at $191.71 at last check on Monday. Image via Shutterstock Latest Ratings for GOOGL Date Firm Action From To Feb 2022 MKM Partners Maintains Buy Feb 2022 Mizuho Maintains Buy Feb 2022 Piper Sandler Maintains Overweight View More Analyst Ratings for GOOGL View the Latest Analyst Ratings Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? ALPHABET (GOOGL): Free Stock Analysis Report This article Alphabet's Legal Woes May Create Buying Opportunity: Analyst originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Globe and Mail
12-06-2025
- Business
- Globe and Mail
Google offers buyouts to more workers amid AI-driven tech upheaval and antitrust uncertainty
MOUNTAIN VIEW, Calif. (AP) — Google has offered buyouts to another swath of its workforce across several key divisions in a fresh round of cost cutting coming ahead of a court decision that could order a breakup of its internet empire. The Mountain View, California, company confirmed the streamlining that was reported by several news outlets. It's not clear how many employees are affected, but the offers were made to staff in Google's search, advertising, research and engineering units, according to The Wall Street Journal. Google employs most of the nearly 186,000 workers on the worldwide payroll of its parent company, Alphabet Inc. 'Earlier this year, some of our teams introduced a voluntary exit program with severance for U.S.-based Googlers, and several more are now offering the program to support our important work ahead," a Google spokesperson, Courtenay Mencini, said in a statement. 'A number of teams are also asking remote employees who live near an office to return to a hybrid work schedule in order to bring folks more together in-person,' Mencini said. Google is offering the buyouts while awaiting for a federal judge to determine its fate after its ubiquitous search engine was declared an illegal monopoly as part of nearly 5-year-old case by the U.S. Justice Department. The company is also awaiting remedy action in another antitrust case involving its digital ad network. U.S. District Judge Amit Mehta is weighing a government proposal seeking to ban Google paying more than $26 billon annually to Apple and other technology companies to lock in its search engine as the go-to place for online information, require it to share data with rivals and force a sale of its popular Chrome browser. The judge is expected to rule before Labor Day, clearing the way for Google to pursue its plan to appeal last year's decision that labeled its search engine as a monopoly. The proposed dismantling coincides with ongoing efforts by the Justice Department to force Google to part with some of the technology powering the company's digital ad network after a federal judge ruled that its digital ad network has been improperly abusing its market power to stifle competition to the detriment of online publishers. Like several of its peers in Big Tech, Google has been periodically reducing its headcount since 2023 as the industry began to backtrack from the hiring spree that was triggered during pandemic lockdowns that spurred feverish demand for digital services. Google began its post-pandemic retrenchment by laying off 12,000 workers in early 2023 and since then as been trimming some divisions to help bolster its profits while ramping up its spending on artificial intelligence — a technology driving an upheaval that is starting to transform its search engine into a more conversational answer engine.
