Buy any remedy-driven pullback in Alphabet stock: JPMorgan

Investing.com -- Alphabet (NASDAQ:GOOGL) shares remain a top pick at JPMorgan, which said it would view any remedy-driven pullback related to the U.S. search antitrust case as a buying opportunity.

The Wall Street giant sees the upcoming ruling—expected by August 8—as a potential source of volatility, but not a reason to turn cautious.

“We’d be buyers on any remedy-driven pullback,” analysts led by Doug Anmuth wrote, arguing that investors may already be braced for a negative outcome, and that the actual remedy “could be less punitive than expected.”

The team believes the base case would include the end of exclusionary practices and a ban on preloading Google Search across general access points such as Apple (NASDAQ:AAPL), third-party browsers, Android, and Chrome in the U.S.

Less certain is whether the judge will take more aggressive steps—such as prohibiting Google from paying for any search distribution, forcing a Chrome divestiture, requiring data sharing with rivals or advertisers, or placing restrictions on AI initiatives. The duration of any remedy also remains unclear, with the DOJ seeking a 10-year term and Google proposing three.

The analysts said they would be most surprised by a mandated Chrome divestiture or limitations on Google’s AI efforts. They also argued that the actual impact will depend in part on how Apple—though not a party to the suit—chooses to proceed with search on Safari once the case is resolved.

JPMorgan estimates that roughly 78% of Alphabet’s U.S. Search & Other revenue is tied to access points preloaded with Google Search, representing about 19% of Alphabet’s total revenue.

The analysts believe this exposure could translate into a 5–10% hit to GAAP earnings per share (EPS) in a downside scenario, depending on how the remedy is implemented.

They also noted that Alphabet will appeal the August 2024 monopoly ruling, and potentially the remedy itself, which could extend the legal process by another one to two years.

“And there is potential for the remedy to become less onerous to Google via an ultimate settlement. We believe those possibilities outweigh the near-term risks,” the analysts continued.

Meanwhile, Alphabet’s recent earnings helped underpin JPMorgan’s bullish stance. The company posted accelerating Cloud growth of 32% year-over-year, with Search and Other revenues up 11% excluding forex, and operating margins expanding even after adjusting for legal costs.

Valuation also remains attractive in analysts’ view, with Google shares trading at 18.3 times JPMorgan’s 2026 GAAP EPS forecast and 16.3 times its 2027 estimate.

Alphabet is the firm’s second-favorite large-cap internet stock, just behind Amazon (NASDAQ:AMZN).