META vs. GOOGL: How the Recent Court Ruling Is Hitting Both Stocks Differently

Tech giants Meta Platforms (META) and Alphabet (GOOGL) were both hit by the same court ruling, but analysts’ reactions show that they are not being treated the same way. For context, a Los Angeles jury found both companies liable in a youth addiction case and awarded $6 million in damages. Investors are now trying to figure out which stock is the better Buy from here. While both face legal risk, the real difference comes down to how much risk is already priced in and how much more could still come.

META: Bigger Upside, But More Legal Risk

Meta clearly has strong upside potential, but it also comes with more legal pressure right now. The stock recently hit a 52-week low, not just because of the California ruling, but also due to a separate $375 million verdict in New Mexico. That’s important because it shows this isn’t just one case, but part of a broader legal trend. In fact, analysts are warning that these rulings could lead to similar lawsuits in the U.S., Canada, and the U.K., which adds more uncertainty going forward.

At the same time, JPMorgan (JPM) said that the California case alone could open the door to thousands of additional lawsuits and may even force Meta to change its products in ways that hurt engagement and revenue. As a result, the firm expects the stock to remain under pressure in the near term. Still, there is a more bullish side. Rosenblatt pointed out that these decisions will likely be appealed, and higher courts could be more favorable to social media companies.

GOOGL: Cleaner Story, Stronger Near-Term Setup

Alphabet (GOOGL), on the other hand, looks like the cleaner setup, even though it was also part of the same lawsuit through YouTube. While there is still legal risk, it is not the main focus of the investment story. Instead, analysts are focusing more on Alphabet’s strength in AI and infrastructure. For instance, Wells Fargo raised its price target on GOOGL stock from $387 to $397 and kept a Buy rating despite the lawsuit, thanks to its position in AI computing, its TPU ecosystem, and its relationship with Anthropic.

In addition, Alphabet’s $32 billion acquisition of Wiz strengthens its position in cloud and cybersecurity, which adds another growth driver. So while Meta is dealing with multiple legal issues at once, Alphabet has a clearer story. Therefore, even though both stocks were affected by the same news, investors are viewing Alphabet as less risky and more supported by fundamentals in the near term.

Consensus Estimates

When looking at analysts’ consensus estimates overall, analysts think that META stock has more room to run than GOOGL. In fact, META’s price target of $865.58 per share implies 65.2% upside versus GOOGL’s 36.8%.