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Investing.com - The UK’s Competition and Markets Authority (CMA) proposed on Tuesday to designate Alphabet (NASDAQ:GOOGL) with Strategic Market Status (SMS) in general search and advertising. The tech giant, currently rated as undervalued according to InvestingPro Fair Value analysis, generates impressive revenue of $307.4 billion annually, with a healthy operating margin of 28%.
The proposal follows an initial investigation opened on January 14, marking the first SMS investigation under the CMA’s new digital markets competition regime that took effect on January 1. A final decision on Alphabet’s SMS designation is expected by October 13. InvestingPro analysts highlight that Alphabet maintains a strong competitive position with over 15 key advantages, including significant market share in search advertising.
If designated with SMS, Alphabet would face near-term remedy priorities including choice screens, non-discriminatory ranking results, transparency for publishers, and data portability. The CMA also plans to consider a second phase of potential remedies starting in the first half of 2026.
The UK market represents approximately 10% of Alphabet’s search revenues currently, according to Cantor Fitzgerald estimates. The regulatory action could potentially create modest headwinds for Alphabet’s search business depending on the outcome and severity of remedies.
Cantor Fitzgerald maintained its Neutral rating and $171.00 price target on Alphabet stock following the regulatory development.
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