From Morningstar: 2024-10-10 06:04:00

The US Department of Justice released a remedy framework for the Google Search antitrust case against Alphabet, including structural, contractual, and data-related remedies. The final proposal will be filed on Nov. 20. Fair Value Estimate: $209, Morningstar Rating: 4 stars, Moat Rating: Wide, Uncertainty Rating: Medium.

The case could affect Alphabet’s cash engine, Google Search, with potential divestitures of Chrome and Android. Investors should note a breakup would require proof that other remedies won’t suffice. The DOJ proposal may include restrictions on exclusive agreements with companies like Apple and Samsung, but we don’t see this as value-destructive for Alphabet.

Maintaining a fair value estimate of $209 per share for Alphabet, we believe the firm can navigate antitrust challenges. Despite headline risks, Alphabet is positioned well in various markets, including advertising, video, public cloud, and generative AI. Diversification away from search-based advertising, especially with Google Cloud investments, is viewed positively.

Continuing to view Alphabet’s strengths as a business, focusing on markets like advertising, video, public cloud, and AI. Despite antitrust challenges, Alphabet is seen as a well-positioned company. Diversification away from search-based advertising and investments in Google Cloud are expected to be value-accretive as public cloud spending on AI increases.



Read more at Morningstar: Alphabet: Stock Attractive With Company Well-Placed…