Shares of Alphabet (GOOGL) have recently peaked, influenced by a favorable ruling in US antitrust cases regarding Chrome and Android. This decision has somewhat alleviated fears about potential impacts on Google’s core search business. Over the past week, the stock has shown impressive resilience, climbing by 12% and now approaching about $230 per share.
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Alphabet has emerged from lawsuits with certain limitations, but these shouldn’t be too detrimental. The recent stock surge seems to have been driven more by speculation than by substantial advancements that would support the growth of its search division. Traditionally, Google has thrived even under high valuations, so it doesn’t feel like the right time to take a different viewpoint on Alphabet shares.
Antitrust Victory Lifts Confidence in Alphabet’s Search
Markets tend to shy away from uncertainty. These situations can be tricky to value accurately, and investors often brace for worst-case scenarios, especially involving unpredictable legal proceedings or regulatory judgments.
This past year has seen its share of such challenges for the company. Accusations of illegal monopoly led to concerns about having to sell Chrome and impose restrictions on Android. Fortunately, a ruling from a US court in early September stated that Alphabet wouldn’t need to divest or limit these products.
This was certainly a relief. With Chrome holding 54% of the US search market and Android covering 74% of the mobile operating system sector, selling these assets would have been a significant setback. It’s worth noting that searches and related segments account for about 65% of Alphabet’s overall revenue, according to the latest quarter’s numbers.
Since last year, especially in 2025, there has been some skepticism regarding Alphabet’s search segment, primarily due to the impact of AI on search and advertising. Still, financial results have demonstrated a level of resilience. For the past two years, the search and related sectors have maintained steady, albeit modest, double-digit growth rates, except for a 9% increase year-over-year in the third quarter of 2024.
As the perception of risk surrounding Alphabet’s search business shifted after the antitrust ruling, GOOGL has achieved a record high, suggesting the market is reassessing the growth potential in search.
Warning Signals from Alphabet’s Antitrust Decision
One cautionary note from Alphabet’s antitrust win is that the company did not exit entirely unscathed. The court imposed restrictions on the distribution of Google’s services and mandated that search data be shared with competitors, reducing the exclusivity that had previously benefited Alphabet.
This raises concerns about user privacy, especially with competitors like Apple’s Safari commanding around 15% of the global browser market, recognized for its robust privacy features. On the bright side, however, the recent court ruling did not alter Alphabet’s $20 billion contract with Apple, ensuring Google remains the default search engine for its devices.
The primary impact seems to be on data-driven competitors. They can now challenge Google more effectively. With better access to aggregated search data, these rivals can enhance their AI models, delivering more personalized search experiences and potentially boosting targeted advertising.
In the short term, the repercussions may be limited. However, medium-term competition in AI-enhanced search products from companies like OpenAI could ensure that Alphabet has to keep innovating to preserve its market position.
Why GOOGL Stock Isn’t Slowing Despite Higher Multiples
Alphabet currently is trading at its highest ever, bolstered by a robust business model that includes search, YouTube, cloud services, and various other ventures. While its valuation multiples are still relatively modest when compared to other major tech companies, it’s crucial to consider the ad-based revenue model that can be sensitive to economic fluctuations.
With a forward revenue multiple of 23.2x, Alphabet ranks lowest among its major peers, while its EV/sales ratio is second only to Amazon. Analysts project a long-term EPS compound annual growth rate of 15% over the next 3-5 years, suggesting a peg of 1.5.
Looking back at Alphabet’s history, its current revenue multiple of 22.5 is below the five-year average of 25, and typically, Google’s stock has tended to rise whenever multiples surpass 23. This suggests that a higher valuation hasn’t derailed stock performance but has coincided with a broader market optimism.
Should You Buy, Hold, or Sell GOOGL?
Wall Street holds a positive outlook on Google. Of the 36 analysts tracking the stock in the past three months, 27 have assigned buy ratings, while nine recommend holding. Although there has been a recent uptick in price targets, Google’s average target stands at $230.06, implying about a 1% downside from the current trading price.
Alphabet’s Potential Remains Despite Multiples
Alphabet shares have recently hit a milestone, bolstered by an encouraging outlook for the search business rather than major breakthroughs. Yet, there is still grounds for optimism regarding current multiples.
Over the past few years, Alphabet stocks have managed to thrive across a broad range of multiples, paralleling a stronger growth narrative. This indicates that the market may be showing increased resilience, even valuing Alphabet at a premium due to its higher ratings. Therefore, at this time, I consider Alphabet a buy.
