Bank of America grew more optimistic on Alphabet and Apple after the Google search operator avoided a major break-up in an antitrust case. Analysts at the the bank raised their price target on the Google parent to $252 per share from $217, signaling 19% upside. As for Apple, they see the stock rising to $260 from $250, implying a gain of about 13%. Last year, Google was found to hold an illegal monopoly in its core market of internet search. But while the U.S. Department of Justice had proposed Google break up some of its assets, including its Chrome browser, U.S. District Judge Amit Mehta ruled against some of the more severe proposed consequences. Alphabet will not have to divest Chrome but will be barred from exclusive contracts. Shares of Alphabet popped 6% in the premarket Wednesday. With this ruling, Google can continue to pay Apple to be the default search engine on iPhones. Apple stock was last trading 3% higher in the premarket. GOOG AAPL 5D mountain GOOG/AAPL 5D chart “Since the potential for a Chrome divestiture seemed remote, our top takeaway is the judgment preserves Google’s ability to maintain its search distribution position through TAC [traffic acquisition costs] payments to partners,” wrote analyst Justin Post. “Given superior Google search monetization, we believe most partners will remain aligned with Google, with little incentive to develop their own search capabilities.” Post also highlighted Google’s improving position in artificial intelligence and search products as another catalyst. “We think continued evidence of Gemini progress and search usage growth can drive further multiple expansion for the stock toward historical premiums,” he added. As for Apple, BofA analyst Wamsi Mohan wrote that this decision solidifies his confidence in Apple’s services revenue estimates. “While Google will be barred from entering or maintaining exclusive contracts related to distribution of Google Search, Chrome, Google Assistant, and the Gemini App; for now, Google will be permitted to pay distributors for default placement (preloading or placement of Google Search, Chrome, or its Gen AI products) one year at a time,” he wrote. “In our opinion, the substance of this remedy already exists today where Apple has Google as the default search engine, but also allows users to change that default to some other search engine in settings (choice screen not mandated).” Shares of Alphabet have added 11% this year, while Apple stock has shed 8%.
