GOOGL Rises on Favorable Antitrust Ruling: Buy or Hold the Stock?

Alphabet GOOGL shares have risen roughly 10% in the past two trading sessions, eventually closing at $232.30 on Sept. 4. The appreciation can be attributed to a favorable ruling by a U.S. District Judge Amit Mehta against the severe remedies proposed by the Department of Justice (DOJ) that included the forced divestiture of Chrome browser and Android operating system. However, Google will now face limitations on its distribution policy related to services and must share search data with rivals. Per CNBC, the respective parties are set to meet by Sept. 10 for the final judgement.

Alphabet is now prohibited from entering or maintaining exclusive contracts relating to the distribution of Google Search, Chrome, Google Assistant, and the Gemini app. GOOGL now has to share certain search index and user-interaction data with rivals. GOOGL now must offer “search and search text ads syndication services to enable rivals and potential rivals to compete.” However, per CNBC, Alphabet doesn’t need to “share or provide access to granular data with advertisers.” 

Google continues to dominate the Search business with a roughly 90% share, followed by Microsoft’s MSFT Bing, with 3.88% share, per the latest data from StatCounter. Its Search business handles over 5 trillion queries annually. The company has been actively embedding AI, especially within Search, to enhance user experience, provide better AI-focused features and consequently improve ad performance. This is driving Google Search and other revenues, which increased 11.7% year over year to $54.19 billion in the second quarter of 2025.

GOOGL’s prospects are now expected to benefit from easing regulatory headwinds. The latest ruling is expected to keep Alphabet’s relationship with Apple AAPL untouched as the iPhone maker offers Google Search engine as the default in its Safari browser. As per data from the trial, GOOGL paid more than $26 billion to Apple and others in 2021.

GOOGL Stock’s Performance

Year to date, Alphabet shares have appreciated 22.7% outperforming peers including Apple, Microsoft and Amazon AMZN. Microsoft and Amazon shares have returned 20.5% and 7.5%, respectively, while Apple shares dropped 4.2%.

AI Push to Boost GOOGL’s Search Prospects

Alphabet is advancing visual and contextual search capabilities. The Circle to Search feature is now active on more than 300 million devices. The company is adding functionalities to help people explore complex topics and ask follow-up questions without switching apps. For instance, gamers can now use Circle to Search while playing mobile games to see an AI Overview or answers.

AI Overviews now reach more than 2 billion users per month and are available in over 200 countries across 40 languages. It is now driving over 10% more queries globally. Powered by Gemini 2.5, AI Overviews currently delivers the fastest AI responses in the industry. The combination of lens or Circle to Search, together with AI Overviews, is driving multimodal search usage. 

Google’s AI-powered Search features are driving deeper engagement, with AI Mode offering advanced reasoning and multimodal responses. Users are generating queries twice as long as those in traditional searches. The launch of AI Mode in the United States and India — where it currently has more than 100 million monthly active users — is expected to drive further growth. 

AI Mode in Search is now expanded to more than 180 countries and territories in English. Alphabet has added new agentic and personalized capabilities, designed to help people complete tasks more efficiently and get results tailored to their interests. Alphabet plans further expansion into more languages and markets soon.

Earnings Estimate Revisions Show Upward Trend for GOOGL

The Zacks Consensus Estimate for third-quarter 2025 earnings is pegged at $2.33 per share, up by a penny over the past 30 days, indicating 9.9% year-over-year growth. 
 

Alphabet Inc. Price and Consensus

Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote

The consensus mark for 2025 earnings is pegged at $10 per share, up six cents over the past 30 days, suggesting 24.4% over 2024’s reported figure.

Here’s Why Investors Should Hold GOOGL Stock Now

Alphabet’s growing AI-powered Search capabilities and significant investments in cloud computing bode well for long-term investors. So, investors who have already invested in GOOGL stock should continue to hold it.

However, Alphabet is facing stiff competition in the cloud computing space, currently dominated by Amazon and Microsoft. GOOGL is suffering from a lack of capacity, and until new capacity comes online this year, cloud revenues are expected to witness increased variability. The company expects to invest roughly $85 billion in capital expenditures in 2025, which is aimed at building up technical infrastructure, primarily for servers, followed by data centers and networking.

A Value Score of C suggests a stretched valuation for Alphabet at this moment. GOOGL stock is overvalued, with a forward 12-month price/sales of 7.76X compared with the Zacks Internet Services industry’s 6.1X and Amazon’s 3.32X. However, GOOGL stock is cheaper than Microsoft’s 11.45X.

GOOGL Valuation

Alphabet currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to start accumulating the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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