AI Adoption And Cloud Demand Will Boost Market Opportunity

Analysts view the DOJ antitrust ruling as materially less punitive than expected, reducing regulatory risks and supporting Alphabet’s competitive positioning in search, AI, and cloud, leading to a constructive outlook and maintaining the consensus price target at $226.71.

Analyst Commentary

• Bullish analysts are raising price targets as the recent DOJ antitrust remedy in the Google search case removes major regulatory overhangs, with remedies considered materially less punitive than feared and allowing Google to maintain key distribution and Traffic Acquisition Cost payments.
• The court’s decision ensures Google will not be forced to divest core assets like Chrome or Android, nor required to implement a search choice screen, preserving Google’s dominant search distribution and partner relationships.
• Analysts expect the ruling to drive multiple expansion for Alphabet, citing a closing gap to historical valuation levels and reduced discounts relative to peers, supported by resilient ad trends and ongoing AI progress.
• The decision is viewed as confirming Google’s strong competitive position in AI and cloud, with the company labeled as an “AI winner,” and positive trends seen in cloud growth, AI adoption, and monetization opportunities.
• While some remain Neutral due to prior anticipation of the outcome or broader competitive pressures, the consensus is that the legal resolution is a net positive for financials and sentiment, providing near-term clarity and lifting a significant stock overhang.

What's in the News

• Apple is evaluating Google's Gemini AI to potentially power a new AI-driven Siri search feature, while also negotiating a broader partnership around Siri's 2026 overhaul (Bloomberg, 2025-09-03; 2025-08-22).
• A U.S. judge ruled that Google will not be forced to divest Chrome as an antitrust remedy but barred the company from entering exclusive internet search contracts; meanwhile, the EU has postponed a significant antitrust fine over fears of retaliation impacting U.S.-EU trade talks (Bloomberg, 2025-09-02; 2025-09-03).
• Google secured a $10B+ multi-year cloud contract from Meta, and separately, its Waymo robotaxi fleet in the San Francisco Bay Area has expanded to 800 vehicles, nearly tripling previous disclosures (CNBC, The Information, 2025-08-21; SF Examiner, 2025-08-28).
• Alphabet's Verily is shuttering its medical device program to concentrate resources on AI and data infrastructure, and Google continues to seek new AI/data licensing opportunities with news organizations (Business Insider, 2025-08-27; Bloomberg, 2025-07-22).
• Regulatory and legal pressures are mounting globally: Google lost an antitrust case in Australia concerning app store practices, faces continued EU scrutiny (with a pending fine and a €4.12B penalty recommendation), and is being designated as holding "strategic market advantage" in the UK, increasing its exposure to new regulatory regimes (ABC, FT, WE, 2025-08-13, 2025-06-20, 2025-07-21).

Valuation Changes

Summary of Valuation Changes for Alphabet

• The Consensus Analyst Price Target remained effectively unchanged, at $226.71.
• The Consensus Revenue Growth forecasts for Alphabet remained effectively unchanged, at 11.3% per annum.
• The Discount Rate for Alphabet remained effectively unchanged, at 8.03%.