AI is Google's competition. Will a DOJ ruling help Google fight back?
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Google can thank AI for proving it is facing plenty of competition.
- With a crucial antitrust case over, the company may have more room to fight in the AI arena.
Why it matters: Wall Street is suddenly a lot more bullish on parent company Alphabet's prospects.
What they're saying: "This clears the path for Google to dive into the deep end of the pool on AI," Dan Ives, global head of technology research at Wedbush Securities, told Axios.
- OpenAI and Perplexity made clear their interest in potentially buying the Chrome browser, showing how valuable Google's market position is, even amid the AI revolution.
Zoom in: A judge's ruling framed AI as a direct threat to the primacy of traditional internet search, undercutting the DOJ's case that Google holds an unshakable monopoly.
- The court sees AI as Google's competition, and it spent about half of the 200-plus-page ruling discussing exactly that.
- But the company still faces constraints, like sharing data with competitors and a bar on locking in long-term search deals.
Zoom out: For investors, the ruling removes a key overhang. Google was the third-worst performer among the "Magnificent 7" this year until markets priced in a legal win. That slump left Alphabet looking cheap.
- The stock is currently trading around 20 times forward earnings, which is 10% below its historic average — and the cheapest in the Mag 7.
- Google is "basically a value stock," writes Chris Marangi, co-CIO of value at Gabelli Funds.
The intrigue: The ruling's emphasis on AI as a competitor for Google paints the bear case for the stock pretty well.
- Investors will want to see a new AI story from Alphabet in short order, whether that's growth in its Gemini platform or higher adoption of AI mode in Google search.
