Alphabet shares jumped more than 7% Wednesday after a U.S. court rejected the Justice Department's push to break up Google, delivering a major relief to investors and preserving the company's ability to control key businesses such as Chrome and Android.
U.S. District Judge Amit Mehta ruled that Google will not be required to divest its Chrome browser or Android mobile operating system, though the court imposed restrictions on exclusive contracts with device makers and browser developers. Google can still make payments to partners like Apple to feature its search engine by default, a practice worth billions annually.
"This is a monster win for Cupertino and for Google it's a home run ruling that removes a huge overhang on the stock," Daniel Ives, global head of technology research at Wedbush Securities, wrote in a note, raising his price target for Alphabet to $245. Shares of Apple also gained 3% in premarket trading.
Alphabet's stock added more than $170 billion to its market value on the news, outpacing the S&P 500 and reinforcing its status among the so-called Magnificent Seven. The company's shares are up nearly 12% this year, though they continue to trail peers such as Meta and Microsoft.
Analysts said the outcome preserves Alphabet's most lucrative partnerships. "The payments from Google were a huge revenue generator for the tech giant and the fact these can continue will be a relief in what has been a turbulent year," said Ben Barringer, head of technology research at Quilter Cheviot.
The case stems from a 2020 lawsuit in which the Justice Department alleged Google illegally maintained a monopoly in search through exclusionary deals. Last year, Judge Mehta ruled that Google had violated antitrust laws but stopped short of ordering a breakup, pointing to emerging AI competitors such as OpenAI and Perplexity as evidence of evolving market dynamics.
Under the ruling, Google must share certain search index and interaction data with rivals, which the Justice Department argued would bolster competition in generative AI. But analysts questioned the impact. "The order requires data sharing that is limited in scope, in a way we conclude may only marginally boost competition by generative AI services," said Nick Rodelli, legal analyst at CFRA Research's Washington Analysis.
Google, meanwhile, continues to pin its long-term growth on its Gemini AI models and chatbot. With Android powering roughly 70% of smartphones worldwide, analysts said the ruling strengthens Alphabet's ability to integrate Gemini into consumer products. Apple is also in early talks to use Gemini to revamp its Siri assistant, Bloomberg reported.
