Alphabet’s Antitrust Relief and AI Momentum: Is GOOGL a Buy at a Discount?

In September 2025, Alphabet’s stock surged by 9% following a landmark antitrust ruling that spared the company from a forced breakup, adding $230 billion to its market value [1]. While the decision mandated data-sharing concessions with competitors like Microsoft and OpenAI, it preserved Google’s dominance in search and default partnerships with Apple, ensuring continued revenue from its $371.4 billion annual base [2]. This regulatory reprieve, coupled with aggressive AI integration across core services, has positioned Alphabet as a compelling strategic opportunity for investors seeking exposure to AI-driven growth at a valuation discount relative to peers.

Antitrust Relief: A Win for Stability, Not a Free Pass

The ruling by U.S. District Judge Amit Mehta acknowledged Google’s monopolistic practices in online search but stopped short of structural remedies like selling Chrome or Android [3]. Instead, the court required Alphabet to share search data with rivals, a move critics call a “slap on the wrist” but one that avoids the existential threat of a breakup [4]. This outcome removes a key regulatory overhang, allowing Google to maintain its lucrative default search arrangements with Apple and other partners. For investors, the ruling signals regulatory caution in the face of AI’s disruptive potential, as courts appear hesitant to dismantle Big Tech’s infrastructure before the sector’s competitive dynamics fully evolve.

AI Momentum: Defending Margins, Expanding Cloud

Alphabet’s AI strategy is now deeply embedded in its core operations. The company’s Gemini AI models are being integrated into Search, Workspace, and Android, aiming to defend its $220 billion search and ads franchise, which operates at 55% margins [2]. Meanwhile, Google Cloud is accelerating its growth trajectory, with revenue rising 32% YoY to $13.6 billion in Q2 2025—outpacing analyst expectations [2]. Strategic partnerships, such as the collaboration with Oracle to offer Gemini AI models and the Revolut cloud deal, further strengthen its enterprise AI offerings. These moves are critical as AI-first competitors like OpenAI and Anthropic gain traction, but Alphabet’s scale and data infrastructure provide a formidable moat.

Valuation Attractiveness: A Discount to Tech Peers

Alphabet’s forward P/E ratio of 21.9 and EV/EBITDA of 17.3 place it at a significant discount to Microsoft (32.8 forward P/E, 24.2 EV/EBITDA) and Nvidia (30.2 forward P/E, 41.9 EV/EBITDA) [5]. This gap reflects market skepticism about Alphabet’s ability to replicate the AI-driven growth of its peers, but it also creates a compelling entry point. Analysts project 2025 EPS of $9.94, rising to $10.61 in 2026, with double-digit revenue growth across core divisions [2]. The company’s balance sheet, with $95.1 billion in cash against $41.7 billion in debt, provides flexibility for AI R&D and regulatory compliance, further enhancing its long-term appeal.

Risks and Considerations

While the antitrust ruling is a net positive, Alphabet faces challenges. The data-sharing mandates could erode its competitive edge by giving rivals access to its proprietary search algorithms. Additionally, the AI arms race is intensifying, with Microsoft’s Azure and Nvidia’s GB200 chips threatening to outpace Google’s cloud infrastructure. However, Alphabet’s disciplined capital allocation and focus on high-margin services like Search and Workspace provide a buffer against these risks.

Conclusion: A Strategic Buy for AI-Centric Portfolios

Alphabet’s antitrust relief and AI momentum create a rare confluence of regulatory stability and growth potential. At a forward P/E of 21.9 and EV/EBITDA of 17.3, the stock trades at a meaningful discount to Microsoft and Nvidia, offering a margin of safety for long-term investors. While the company must navigate regulatory and competitive headwinds, its structural advantages in search, Android, and cloud position it to capitalize on AI’s next phase. For investors seeking exposure to AI-driven growth without paying the premium demanded by peers, GOOGL represents a compelling strategic opportunity.

Source:
[1] Alphabet shares surge after dodging antitrust breakup bullet [https://www.reuters.com/sustainability/boards-policy-regulation/alphabet-shares-surge-after-dodging-antitrust-breakup-bullet-2025-09-03/]
[2] Alphabet's SWOT analysis: AI-driven growth fuels stock amid regulatory challenges [https://www.investing.com/news/swot-analysis/alphabets-swot-analysis-aidriven-growth-fuels-stock-amid-regulatory-challenges-93CH-4198413]
[3] Google Dodges Chrome Sale in Antitrust Case Ruling [https://www.bloomberg.com/news/articles/2025-09-02/google-not-required-to-sell-chrome-in-court-antitrust-ruling]
[4] Google antitrust ruling seen as light punishment [https://neworleanscitybusiness.com/blog/2025/09/04/google-antitrust-ruling-search-monopoly-justice-department/]
[5] NVIDIA (NVDA) Financial Ratios [https://stockanalysis.com/stocks/nvda/financials/ratios/]