Alphabet stock rating reiterated at Buy by BofA amid DoJ remedy concerns

Investing.com - BofA Securities has reiterated its Buy rating on Alphabet (NASDAQ:GOOGL), currently trading at $201.14 with a market cap of $2.43 trillion, with a price target of $217.00 as the firm evaluates potential Department of Justice remedy scenarios. According to InvestingPro analysis, the company maintains a "GREAT" financial health score, suggesting strong fundamentals despite regulatory challenges.

The investment bank highlighted three key aspects of the DoJ’s remedy requests that could impact Alphabet: Chrome divestiture, Google’s traffic acquisition cost (TAC) payments for default placement, and Search data sharing requirements. With revenue growing at 13.13% and maintaining robust profitability, the company appears well-positioned to navigate potential regulatory changes.

BofA noted that structural remedies, particularly a Chrome divestiture, would be "more disruptive" to Alphabet by reducing synergies and scale advantages across Google’s ecosystem, though such measures are rare in U.S. precedent.

For behavioral remedies, BofA indicated that market expectations include elimination of exclusive search deals and implementation of choice screens, while the "biggest concern" involves potential mandated changes to U.S. TAC agreements, which BofA estimates will reach $17.5 billion to Apple (NASDAQ:AAPL) in 2026.

The firm also warned that new data sharing requirements could "dilute Google’s data advantage," potentially undermining the company’s differentiated ad stack and intensifying competition in the search market.

In other recent news, Alphabet, the parent company of Google, has been involved in several significant developments. Alphabet is offering its advanced AI tools free to college students worldwide, starting with the U.S., Japan, Indonesia, Korea, and Brazil. This initiative allows students aged 18 and older to access a 12-month Google AI Pro plan at no cost, which includes various tools for academic and creative pursuits. Meanwhile, Wells Fargo (NYSE:WFC) is expanding its partnership with Google Cloud to enhance the deployment of AI agents, aiming to improve efficiency across its operations. In another development, Google DeepMind has unveiled Genie 3, a real-time interactive world model capable of generating dynamic virtual environments. On the financial front, DA Davidson has reiterated its Neutral rating on Alphabet stock, suggesting a potential corporate breakup could provide value. Citizens JMP, however, has maintained a Market Outperform rating on Alphabet, reflecting a positive outlook with a price target of $225.00. These recent developments highlight Alphabet’s ongoing efforts in AI innovation and its strategic partnerships.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.