Alphabet Stock Soars as Judge Lets Google Keep Its Search Power Grip

Alphabet stock jumped after a U.S. judge issued limited remedies in its monopoly case. This eased fears of harsh penalties, and it boosted investor confidence in the company’s continued dominance.

Alphabet stock (GOOGL) jumped after hours on Tuesday after Judge Amit Mehta released his long-awaited decision in the U.S. vs Google case. Many on Wall Street were bracing for sweeping remedies that could break parts of Google’s business, but the ruling came in lighter than expected.

In particular, the judge decided that Google will not have to sell its Chrome web browser. That was a key worry among investors, who saw the risk of losing Chrome as a major threat to Google’s ecosystem. By leaving Chrome in Google’s hands, the ruling effectively preserves one of the company’s most important gateways into the search business.

The ruling also left the door open for the court to revisit certain elements later. This means the fight is not entirely over, but the initial outcome was a major relief for Alphabet investors who had feared worse.

Court Allows Google to Keep Paying Apple

Another big win for Google was the court’s decision to allow it to continue paying Apple (AAPL) to keep Google as the default search engine on iPhones and other Apple devices. This deal is worth billions of dollars in revenue for Google each year, and losing it could have opened the door to rivals such as Microsoft’s (MSFT) Bing or new AI search engines.

For now, the partnership between Google and Apple remains intact. The judge said the court could revisit this issue in the future, but for now it gives Google’s stock a huge cushion of certainty. Apple also gained from the ruling, with AAPL shares rising around 3% in after-hours trading as investors recognized the ongoing flow of payments from Google.

The Ruling Bars Google from Exclusive Contracts

While the judge spared Google from its worst-case scenario, he did draw a line around exclusivity. The ruling bars Google from entering exclusive contracts that limit the distribution of Google Search, Chrome, Google Assistant, and the Gemini AI app.

This means that rivals will have a chance to compete for distribution that was previously locked up. It opens up some pathways for competitors, but importantly, it does not dismantle Google’s ability to keep paying for placement or to market its services aggressively. Investors saw this as a balanced restriction that trims some of Google’s dominance without cutting off its main revenue engines.

Judge Forces Google to Share Search Data with Rivals

One of the more striking parts of the decision was the requirement that Google share parts of its search index data with competitors. This change could have significant consequences for smaller players in the search market.

Companies like Perplexity and OpenAI, which are building AI-driven search tools, may now gain access to critical data that previously gave Google a huge edge. While this does not directly hit Google’s profits today, it could help foster more competition in the long term. Now, investors should look at how much of Google’s lead this decision could erode in the years to come.

The Case Highlights AI’s Role in Search

Judge Mehta made it clear that artificial intelligence changed the entire conversation. In his ruling, he wrote that the emergence of generative AI “changed the course of this case.” Just a year ago, no one considered AI chatbots like ChatGPT and Perplexity as a serious threat to Google. Today, those platforms are capturing more and more user traffic.

Google itself has responded by adding AI Overviews at the top of its search page and introducing a new AI Mode that offers conversational answers. The judge noted that AI competitors now pose a stronger challenge to Google than any traditional search rival has in decades. That recognition suggests regulators may be less aggressive in dismantling Google, believing that AI will provide new competition naturally.

Alphabet Stock Rallies on Relief

The market reaction told the story. Alphabet stock surged more than 7% in late trading after the ruling was released. Investors saw the decision as a huge relief compared to fears of a breakup or an outright ban on its lucrative default deals. Apple stock also rose by about 3%, reflecting the continued payments it receives from Google.

To sum up, even though Alphabet avoided the harshest penalties, the company still faces oversight. Nevertheless, investors believe Alphabet stock still has plenty of strength left in its search dominance, even as new rivals appear on the horizon.

Is Alphabet a Buy, Sell, or Hold?

Alphabet stock (GOOGL) currently holds a Moderate Buy consensus rating. Out of 35 analysts covering the stock in the past three months, 26 rate it a Buy, nine recommend a Hold, and none suggest a Sell.

The average 12-month GOOGL price target stands at $216.87, which implies a modest 2.61% upside. These analyst price targets could change after the ruling.

See more GOOGL analyst ratings