New Google Price Target After Big Win From DoJ Ruling
The ruling is also prompting a boost to this other Big Tech name's price target.
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We are joining those across Wall Street who are lifting their Alphabet GOOGL price targets following Tuesday night’s antitrust case ruling by the Department of Justice.
While that ruling means that Google must open up competition in online search by sharing more data with competitors and it cannot enter exclusive contracts for search, it could still pay for search engine inclusion. Google is also not required to divest its Chrome browser, a move that was widely speculated as a potential outcome and allows it to maintain a key gateway for its search engine, advertising business and data collection efforts.
In our view, this removes a major overhang for GOOGL shares, and that is prompting us to take our GOOGL price target to $250 from $220. Based on the market reaction and its impact on our GOOGL position size, some prudent Portfolio action may be called for. Such a move would lock in a considerable gain for the Portfolio. Stay tuned on that front.
The ruling also clears the way for Google to continue to pay Apple APPL for search engine placement, removing a potential income statement concern for Apple. Reports put Google’s payment to Apple between $15 billion and $20 billion, and the ruling also allows Apple to renew the deal each year, which gives Apple more leverage in search engine negotiations, given its device install base.
The ruling also said, “Google will not be barred from barred from making payments or offering other consideration to distribution partners for preloading or placement of Google Search, Chrome, or its GenAI products.”
In our view, this opens the door for a similar relationship between Google and Apple for Google’s Gemini or another model to power Apple’s upcoming AI updated Siri, squeezing out rivals like Perplexity. It also paves the way for an eventual Google AI-enabled search engine to become the default on Safari.
For now, we’ll lift our AAPL price target to $250 from $235 but following the company’s “Awe Dropping” event on Monday, September 9, which is expected to unveil its newest iPhone models, we’ll revisit that new target as needed.
Other catalysts that may lead us to tinker with that new target include upcoming monthly revenue reports from Taiwan Semiconductor TSM and Foxconn.
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At the time of publication, TheStreet Pro Portfolio was long GOOGL and APPL.
