Alphabet's Ad Business Got a Lift From a Key Antitrust Ruling, Helping End Google's Worst Losing Streak in Over a Decade. Is Sundar Pichai's Alphabet Stock a Buy Now?

From a company perspective, the outlook for Google parent Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) continues to improve. Earlier this month, a federal judge rejected the Justice Department's efforts to force the company to sell its ad exchange, Chrome, Android, AdTech, and other apps that support Google Advertising.

However, even though it won the right to keep its adtech tools, investors shrugged off the news, and the stock downtrend that began in May appears to have continued. Amid that news and the state of the stock, Alphabet may be a buy, but likely not for the reasons investors think. Here's why.

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Alphabet and its ad business

Despite the company's historical and current importance, investors seem to have written off its ad business, which accounted for 68% of the company's revenue in the second quarter of 2026. While that may sound like a lot, it is down from 74% in the year-ago quarter and 89% 10 years ago.

Alphabet has long been open about its desire to reduce its dependence on ad revenue, and other business segments have picked up the slack. In the latest quarter, Google Cloud made up 21% of the company's revenue, and CEO Sundar Pichai said its autonomous vehicle arm, Waymo, could "meaningfully" contribute to Alphabet's revenue as soon as next year.

Nonetheless, this does not necessarily mean the ruling is meaningless to Alphabet shareholders. Even though investors tend to look forward, a rapid loss of revenue for Google Advertising could have turned into a significant negative for Alphabet investors.

The reason for that concern is the company's free cash flow. In the second quarter of 2016, the company generated almost $20 billion in free cash flow over the trailing 12 months, mostly from ads.

Fast forward 10 years, and yearly free cash flow has risen to $53 billion as of Q2 2026. Still, that comes after the company spent $132 billion in capital expenditures (capex) over the trailing 12 months.

Hence, Google Advertising may be what is keeping Alphabet's free cash flow positive as it makes massive investments in AI. That factor alone makes it hard to dismiss the importance of dodging a bullet on the antitrust front.

Is Alphabet stock a buy now?

After the antitrust ruling, Alphabet stock is likely a buy, and that ruling may be a major reason why.

Admittedly, most investors may not appreciate the ongoing importance of Google Advertising, which could explain the lack of reaction from investors following the ruling.

However, Google Advertising still accounts for 68% of the company's revenue, and this business has long driven the tech stock's strong free cash flows. Hence, it likely played a role in Alphabet's ability to fund its massive capex while keeping the company's free cash flow positive.

Looking ahead, Google Cloud will probably continue to grow in importance, and Waymo is likely to follow soon. Nonetheless, the fact that Google Advertising's influence will fade slowly smooths this transition, which is an unmistakable positive for Alphabet's shareholders.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.