Is Alphabet Stock a Buy After the Latest Antitrust Ruling?

Key Points

• A recent antitrust court ruling involving Google's search business largely favored its parent company, Alphabet.

• One court provision requires Alphabet to share some of its valuable search data with competitors.

• The importance of data to artificial intelligence means the court's decision is a boon for Alphabet's rivals in the race for AI dominance.

• 10 stocks we like better than Alphabet ›

For months, a dark cloud hung over shares of Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) after a federal judge declared its Google search engine business an illegal monopoly. Investors were left waiting for the penalties associated with the court ruling.

Finally, on Sept. 2, the cloud was lifted when the legal repercussions against Alphabet were revealed. And they were far less than what might have happened, such as a forced divestiture of Google's Chrome browser. The tech titan's stock promptly took off, hitting a 52-week high of $235.76 on Sept. 5.

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Does this good news for Alphabet investors mean now is the time to pick up shares? Here's a look at where the company stands today.

Image source: Getty Images.

The latest antitrust ruling's impact on Alphabet

After Alphabet lost the antitrust lawsuit against its Google search engine last year, investors were concerned the presiding judge would impose remedies that could hurt the company's future growth. The U.S. Justice Department sought penalties as far-ranging as selling off Alphabet's Android mobile operating system -- but that won't happen.

Instead, the judge ruled Alphabet will be subject to restrictions that are unlikely to dramatically alter its business. These include prohibiting it from entering into exclusive agreements with partners, such as Apple and Samsung Electronics, which made Google products the default in their offerings. Even so, that doesn't prevent the partners from sticking with the search giant as long as exclusivity isn't part of the deal.

Perhaps the most impactful court requirement is for Google to share some of its search data with competitors. Data is the new gold in today's digital world, particularly for its importance to artificial intelligence (AI).

AI introduces a new threat to Google's search dominance. With AI, Microsoft's Bing search engine can now respond to consumer searches with greater comprehensiveness and accuracy. The court's data-sharing requirement will help Microsoft and other competitors strengthen their AI models.

AI's boost to Alphabet's business

Despite the implications, the court's decision on data sharing may not blunt Alphabet's AI success. Thanks to artificial intelligence, the company's second quarter revenue jumped to $96.4 billion from $84.7 billion in 2024.

Contributing to this is Google's search usage, which grew year over year in Q2 because of new AI features, according to Alphabet CEO Sundar Pichai. Consequently, Google's Q2 search sales rose 12% year over year to $54.2 billion.

The company's cloud computing business, Google Cloud, is another AI beneficiary. Its Q2 revenue was $13.6 billion, a strong 32% increase from the prior year's $10.3 billion, as businesses adopted Google Cloud's AI offerings.

Alphabet's AI app, Gemini, is also seeing phenomenal adoption. In Q2, the app had more than 450 million monthly active users, with daily requests up by more than 50% compared to Q1.

Alphabet's wide-ranging integration of AI across its businesses, and resulting success, give it a strong leg up against competitors that may benefit from gaining access to Google search data. This is why the court requirements from the antitrust case may not impact its business in a material way any time soon.

Other factors to consider with Alphabet stock

Although Alphabet avoided significant harm to its business in the Sept. 2 court ruling, another major antitrust case looms. The conglomerate's advertising business was deemed an illegal monopoly earlier this year, although the penalties in this case have yet to be determined.

Alphabet plans to appeal the ruling, which could tie up the case in court for years And ultimately, as seen in the search monopoly ruling, penalties might be mild.

With this in mind, is now the time to buy Alphabet stock, especially since it recently hit a new high? Certainly, share-price valuation is a consideration, and that can be evaluated using its price-to-earnings (P/E) ratio in comparison to competitors Meta Platforms and Microsoft.

Both Meta and Microsoft battle Alphabet in digital advertising and AI, while the latter also competes in search and the cloud computing space.

Data by YCharts.

As shown in the chart, Alphabet's P/E multiple has been on the rise in recent months, but it's still lower than Meta's and Microsoft's. This suggests Alphabet's shares are a better value than those of its rivals.

In August, I recommended buying Alphabet stock. It's less of a bargain now than it was then, but shares are still worth picking up. With its strong start to AI, ongoing revenue growth across key parts of its business, and lower valuation compared to its competitors, Alphabet is a worthwhile investment to buy and hold over the long run.

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Robert Izquierdo has positions in Alphabet, Apple, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.