Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) is navigating a pivotal period marked by accelerating business fundamentals, robust advertising performance, and strong leadership in AI and cloud computing, even as a critical antitrust ruling looms.

The upcoming decision from Judge Amit Mehta in the U.S. Department of Justice’s search antitrust case, expected by August 8, 2025, could reshape the company’s operational landscape, though the long-term implications are viewed as manageable.

Despite the shadow of regulatory uncertainty, Alphabet’s core growth engines and aggressive AI initiatives signal sustained strength, as underscored by J.P. Morgan analyst Doug Anmuth.

Also Read: Google Cloud, YouTube, And Search Drive Big Upside: Goldman Sachs

On Monday, Anmuth reiterated an Overweight rating on Alphabet with a price forecast of $232, citing accelerating fundamentals, resilient advertising performance, and the company’s long-term leadership in both artificial intelligence and cloud computing.

Anmuth supported the rerating by the company’s accelerating fundamentals, resilient advertising performance, and long-term leadership in artificial intelligence and cloud computing.

While regulatory uncertainty continues to dominate investor sentiment, particularly surrounding the U.S. Department of Justice’s ongoing antitrust case over Alphabet’s search business, the analyst believes the risks are manageable and potentially over-discounted in the stock’s valuation.

He noted that investor attention is now centered on Judge Amit Mehta’s upcoming decision on remedies in the search antitrust case, which is expected no later than August 8, 2025.

While the exact nature of the remedy remains unclear, Anmuth believes the most likely outcome would involve a prohibition on exclusionary practices and exclusive preloading of Google Search across major access points such as Apple (NASDAQ:AAPL) devices, Android smartphones, third-party browsers, and Chrome in the United States.

More punitive measures, such as banning all distribution payments, forcing a Chrome divestiture, restricting AI programs, or enforcing extended remedy durations, are considered less probable but remain on the table, per the analyst.

Regardless of the outcome, Alphabet is expected to appeal both the August 2024 monopoly ruling and any associated remedies, potentially extending the regulatory process by 1.5 to 2.5 years based on historical precedent, such as the Microsoft (NASDAQ:MSFT) case, he noted.

From a financial perspective, Anmuth projects that Alphabet could face a 5% to 10% headwind to GAAP EPS in 2026 if stricter remedies are enforced.

The most exposed segments include U.S. Search & Other revenue, which the analyst estimates will reach $86 billion in 2026, accounting for roughly 78% of Alphabet’s U.S. S&O segment, 35% of global S&O revenue, and 19% of total company revenue. He noted that related U.S. traffic acquisition costs (TAC) are expected to total $20 billion, or 18% of domestic S&O (Sales & Operations) revenue.

Despite these risks, Anmuth considers Alphabet’s second quarter a defining moment for the stock. He noted that Google Cloud revenue grew 32% year-over-year, significantly accelerating, while Search & Other revenue rose 11% excluding foreign exchange impacts.

Excluding legal fees and one-time settlement costs, the company’s operating margin expanded by approximately 150 basis points year-over-year, reflecting continued efficiency even amid a surge in AI-related capital expenditures, as per the analyst.

Valuation remains a strong point, Anmuth noted. Alphabet shares are trading at roughly 18.3 times 2026 GAAP EPS and 16.3 times 2027 EPS, which the analyst sees as attractive given the company’s growth prospects. For 2027, the analyst projects GAAP EPS of $11.89, which supports the firm’s $232 price forecast based on a 19.5x multiple.

Alphabet is ranked as the analyst’s second-highest conviction pick behind Amazon.com (NASDAQ:AMZN), driven by several key tailwinds: sustained leadership in AI and generative search transition, healthy growth in core ad businesses such as Search and YouTube, accelerating demand and capacity expansion in Google Cloud, and improving margin performance despite increased capex and depreciation, he said.

Ultimately, while the legal overhang introduces short-term uncertainty, Anmuth argues that Alphabet remains one of the strongest long-term opportunities in large-cap tech. Any remedy-driven weakness in the stock could offer investors a compelling entry point, especially if the final ruling proves less punitive than feared, as per the analyst.

Price Action: GOOGL stock is down 0.74% at $191.71 at last check on Monday.

Read Next:

• Alibaba’s New AI Glasses Let You Pay, Navigate, And More

Image via Shutterstock