Alphabet Analyst Downgrades Stock On Anti-trust Case Overhang But Retail Reposes Faith In Search Giant

Alphabet, Inc. ($GOOGL) ($GOOG) shares, which witnessed accelerating upward momentum in late 2024, snagged a rating downgrade on Thursday.

After remaining resilient in the first half of the session, Alphabet stock towed in line with the broader market, pulling back by mid-session.

JMP Securities analyst Andrew Boone downgraded Alphabet’s stock to ‘Market Perform’ from ‘Outperform,’ citing regulatory risk, TheFly reported. 

The brokerage sees 2025 as a year of technology inflection for multiple major new technologies as generative artificial intelligence (Gen-AI) is operationalized and autonomous vehicles become more widespread.

Boone raised the specter of ‘antitrust penalties’ that could significantly impact Google’s U.S. distribution of search and search revenue.

The analyst expects the case to be the primary focus for investors in the new year, limiting multiple expansion. 

A federal judge ruled in August that Google holds a monopoly in the search market, responding to a 2020 case filed by the government.

In late November, lawyers representing the Department of Justice (DOJ) submitted the “Initial Proposed Final Judgment (PFJ),” recommending a comprehensive and unitary remedy to ensure Google cannot further cement its search monopoly by engaging in anti-competitive conduct. 

These measures include blocking exclusionary agreements with third parties such as Apple and Samsung, divesting the Chrome browser, and potentially divesting Android. 

The DOJ plans to file a revised PFJ on March 7, 2025, and U.S. District Judge Amit Mehta in Washington, who is presiding over the case, will hold a two-week trial to decide what remedies are appropriate to the case.

The judge plans to issue a remedies ruling by late summer.

Boone said the court decision in the U.S. could be severe, especially after the European regulators failed to make much headway in restraining Google’s search monopoly.

According to the analyst, the stock is fairly valued at current levels.

In 2024, Alphabet stock gained 36%. 

GOOGL sentiment and message volume January 2, 2025,  as of 1:51 pm ET | Source: Stocktwits

Retail sentiment toward the stock is upbeat. On Stocktwits, sentiment improved to ‘bullish’ (55/100) from ‘bearish’ a day ago, with message volume at ‘normal’ levels.

An Alphabet stock watcher on Stocktwits shrugged off the stock weakness and saw it as an opportunity to add to their position.

Another suggested they put some of the cash raised from selling Tesla stock into Alphabet, premised on the view that it is the best technology play in the market.

At last check, Alphabet stock was down 0.60% at $188.17. 

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