Google’s Antitrust Reprieve and AI Monetization Milestone Converge in Alphabet’s Latest Rally

The market’s mood toward Alphabet shifted decisively this week as investors digested a pair of developments that, taken together, reframe the company’s risk profile. Shares climbed 5.47 percent to EUR 325.90 on Monday, building on a move that has now stretched the gain to 10.76 percent across seven trading sessions. The stock has advanced 21.91 percent since the start of the year.

What triggered the surge was not a single catalyst but a convergence: fresh evidence that generative AI is finally translating into revenue at Google, alongside a court ruling that removed the specter of a forced breakup — at least for now.

The Cloud Inflection Point

Alphabet’s cloud division has reached a profitability turning point following its second-quarter 2026 results, according to analysts tracking the business. The advertising format “AI Max” has also exited its beta phase, a milestone the market has interpreted as proof that experimental AI is becoming commercial product. Jefferies, which rates the stock a buy with a price target of $445, sees the cloud services operation at an inflection, with AI driving demand for both traditional cloud offerings and specialized applications.

Morgan Stanley, meanwhile, has shifted its stance on the company’s massive infrastructure spending. The concern that capital expenditures of $195 billion to $205 billion planned for 2026 represent an unsustainable burden has given way to a view that proprietary chips and strong cash flow can absorb the outlay. A new data center campus in Texas, where Google is investing $15 billion in a facility called “Nexus” to supply computing power for AI startup Anthropic, underscores the scale of these ambitions.

A Legal Overhang Lifted — Partially

The more significant driver of the rally, however, came from the courtroom. In the antitrust case over Google’s search monopoly, the court has for now taken a breakup off the table. A forced divestiture of Chrome or Android is no longer on the cards, replaced instead by behavioral remedies. The relief was palpable, though the case is far from closed: the US Department of Justice has formally appealed, seeking harsher conditions.

The practical implications of the current ruling are substantial. Alphabet will be required to share parts of its search index with competitors and unwind exclusive distribution agreements — measures that put pressure on a search market share of roughly 90 percent for the first time in years. The data-sharing requirement carries particular weight: “qualified competitors” could use Alphabet’s historical click and search data to improve their own results, effectively having Google subsidize its rivals’ growth.

Should investors sell immediately? Or is it worth buying Alphabet?

The Moat Question

The central strategic question now is whether Gemini integration in search can retain users on its own merits, rather than through default placement. The answer will determine whether the high-margin advertising business — which has delivered a 92.56 percent gain for the stock over the past twelve months — keeps its foundation intact.

The bull case rests on two pillars. Google Cloud is accelerating with record margins, driven by custom TPU chips for AI workloads. Analysts describe the division as having reached “escape velocity,” contributing far more to group results than in previous cycles. Waymo, meanwhile, has secured a major financing round and expanded operations to more than 20 cities worldwide, including London and Tokyo. The consensus price target stands at EUR 370.64, implying potential upside of 14.1 percent from current levels.

The bear case resides in the same legal proceedings that just provided relief. The stock remains 7.43 percent below its 52-week high of EUR 350.75 from May 2026. Should the appeals court deem the current behavioral remedies too lenient, a sharper dismantling of the Alphabet ecosystem could return to the table. Heavy investment in AI infrastructure is also pushing long-term debt higher and weighing on free cash flow — a factor behind the notably elevated 30-day volatility of 42.21 percent.

What to Watch

The second half of 2026 will likely revolve around one question: how the D.C. Circuit rules on appeal. Confirmation of the current mild conditions would support a move toward the EUR 370.64 target. A reopening of the breakup option could send the stock back toward its 200-day average of EUR 283.08.

An early indicator already exists in the form of the newly established “Technical Committee” overseeing implementation of the data-sharing requirements. Its initial reports should reveal how much competitive pressure the new regulation actually exerts on search margins.

Technically, the stock sits above its 50-day average of EUR 311.45, keeping the short-term trend intact. The RSI of 60.8 indicates upward momentum without overbought conditions, leaving room for another test of the 52-week high. The recent earnings delivered a record profit of $9.11 per share, and concerns that AI features might cannibalize traditional search have so far proven unfounded — AI functions in search appear to be boosting advertising revenue rather than displacing it.