Do Google's Antitrust Woes Make Alphabet Stock a Buy, Sell, or Hold?

Shareholders of Google's parent Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) are going through a rough patch. In the past year, Google lost two major antitrust cases aimed at the heart of its business.

Last August, Google's search engine was deemed an illegal monopoly. Then in April, the tech giant suffered another legal defeat in an antitrust case involving its digital advertising business.

Does this double blow signal it's time for Alphabet shareholders to sell their stock? Perhaps the prudent approach is holding shares and waiting out the storm.

Or considering Alphabet stock is well below the 52-week high of $207.05 reached in February, is now the time to scoop up shares? Evaluating a course of action requires diving into the company in more detail.

Image source: Getty Images.

A look at Alphabet's antitrust losses

The court rulings against Google understandably raise concerns about the company's future. After all, the search engine brought in $50.7 billion of Alphabet's $90.2 billion in first-quarter revenue through advertising. However, the company plans to appeal the verdicts, so the antitrust cases could play out in court for years.

Additionally, it's insightful to examine a similar situation Microsoft faced when it lost an antitrust lawsuit in 1998 over bundling its Internet Explorer web browser and ubiquitous Windows software. The court ordered the breakup of Microsoft, but the tech titan won its appeal, and the case was settled without a breakup.

So Alphabet's defeat in these antitrust cases doesn't signal a dire situation for the company at this point. That said, rather than the antitrust lawsuits, an arguably bigger challenge to Google's business is the rise of artificial intelligence (AI).

Is AI the real threat to Google?

According to research firm Gartner, search engine usage is set to drop by a massive 25% in 2026 as people favor AI tools instead. These apps include OpenAI's ChatGPT.

Google is racing to stay relevant to consumers with the creation of its own AI capabilities. The company injected AI-generated results in searches, and is experiencing excellent outcomes.

Google's Q1 search revenue rose from $46.2 billion in 2024 to $50.7 billion this year. Its new AI Overview is used by over 1.5 billion people per month, and Google is generating revenue at the same rate as before the introduction of its AI features.

AI is a key component in many areas of Alphabet's company. For example, its Waymo autonomous car business relies on AI to make driving decisions. Waymo serviced 4 million passenger trips in 2024, and at the end of Q1, weekly paid passenger rides were up fivefold from the prior year. Waymo is expanding into new markets in 2025, demonstrating the success of Alphabet's AI under the demanding conditions of vehicle driving.

Artificial intelligence is so important to Alphabet's future, the company is investing heavily in its AI infrastructure. Last year it spent $52.5 billion in capital expenditures, and it's spending even more in 2025, upping the investment to $75 billion.

The company can do this because of its hefty free cash flow (FCF). In Q1, Alphabet produced $19 billion in FCF.

What to do with Alphabet stock

After unpacking Google's situation post-antitrust verdicts, selling Alphabet shares seems a hasty move right now. The court cases are likely to drag on for some time as Alphabet appeals.

So any impact to its business could be years away, or even minimal, if Alphabet wins an appeal as Microsoft did. Therefore, if you're a shareholder, hang on to Alphabet stock.

But what about investing in Alphabet? Its stock price dropped over recent weeks due to a stock market crash, which hit after President Donald Trump unveiled his "Liberation Day" tariff plans on April 2, and the second antitrust ruling, announced April 17. These factors contributed to Alphabet stock's price-to-earnings (P/E) ratio falling to its lowest level in a year.

Consequently, Alphabet's P/E multiple is the lowest among its top competitors in the digital advertising space, meaning its stock is the best value. Facebook parent Meta Platforms is second only to Google in the digital ad industry, while Amazon is in third place.

Google's ability to increase revenue, and successfully incorporate AI, coupled with Alphabet's attractive P/E ratio, makes its stock a worthwhile long-term investment. So if you own shares, consider adding to your position. If you don't have Alphabet stock, now is a good time to buy.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Robert Izquierdo has positions in Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool recommends Gartner and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.