(Bloomberg) — After months of underperforming their tech peers, Alphabet Inc. shares are finally showing signs of life as investors bet that a strong earnings performance will outweigh concerns about a looming antitrust ruling.
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The stock just pushed into the green for the year for the first time since February, ahead of results that are expected to bolster sentiment about Alphabet’s position in artificial intelligence. The rebound comes even as a ruling in the Justice Department’s case over Google’s internet search monopoly is expected by August, with a breakup among the potential outcomes.
“If Alphabet can deliver the growth that’s expected of it, then the stock looks incredibly attractive,” said Luke O’Neill, chief investment officer at CooksonPeirce Wealth Management. “There are a lot of questions about what’s on the table in terms of antitrust remedies, and certainly scenarios that are negative, and obviously there are questions about the long-term impact of AI, but it is hard to be too negative.”
For the second quarter, Alphabet is expected to report net earnings of $2.18 a share on revenue of nearly $80 billion, according to data compiled by Bloomberg. That would represent an expansion of 15% and 12%, respectively, over the same period a year ago. That growth is expected to persist, with annual sales projected to expand at a similar clip through 2028.
Shares were little changed on Tuesday but opened higher. Should the stock end in positive territory, that would make for its 10th straight positive session, its longest winning streak since December 2010.
While investors have grown more confident about Alphabet’s ability to compete in AI, the stock is still underperforming the Nasdaq 100 Index and peers like Meta Platforms Inc. in 2025 as antitrust concerns add to fears that Google is at risk of losing share in the web search market from AI chatbots. Even with Alphabet’s recent gains, the stock is flat on the year, compared with an advance of 10% for the Nasdaq 100 and 22% for Meta.
In Alphabet’s antitrust suit, the Justice Department has proposed that Google be forced to sell its Chrome web browser and banned from paying to make its search engine a default, among other remedies. Google has argued that the government’s requests are too extreme and would harm consumers and weaken US technological leadership.
Outside of antitrust problems, investors see Alphabet as well-suited to both monetize new services and defend its market share. Worries about losing ground to rivals like OpenAI have been a persistent fear for investors, especially the idea that Google’s dominance in internet search — from which Alphabet gets more than half its overall revenue — could be at risk.
In May, Alphabet unveiled new AI features that were greeted with enthusiasm, while rising adoption and usage of AI is expected to be a tailwind for the company’s cloud business. Last month, Reuters reported that OpenAI, whose ChatGPT is a key rival, plans to use the company’s Google cloud service for additional computing capacity.
Wall Street remains largely bullish on Alphabet’s potential for long-term revenue growth. More than 80% of analysts tracked by Bloomberg that cover the company have a buy rating and there are no sells. Alphabet is 7.9% below the average analyst price target, suggesting Wall Street sees the stock returning to near-record levels over the coming months.
Alphabet is priced at about 18 times estimated earnings, a discount to its 10-year average. It’s by far the cheapest among the seven most valuable technology companies, with a price-to-projected profit ratio that’s nearly half of Microsoft Corp.’s at 33 times.
“The stock looks like a steal, especially as its tech has advanced, but antitrust risk coming after people were worried about AI disruption is creating a drag,” said Daniel Newman, chief executive officer of The Futurum Group. “The ruling could be deeply punitive, and so long as we don’t know how this will play out, there’s an overhang of uncertainty that can linger on for an extended period.”
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–With assistance from Subrat Patnaik and Margaryta Kirakosian.
(Updates to market open.)
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