DOJ To File Remedies Framework Against Google: JP Morgan Sees Alphabet EPS To Drop 10%, 'Negative Headlines' Likely

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JP Morgan analyst Doug Anmuth expects negative headlines for Google's parent-company Alphabet, Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) when the Department of Justice (DOJ) proposes a broad and punitive set of potential remedies against the company this week.

The Details:

The DOJ is expected to file a high-level framework for potential remedies on Tuesday in its search distribution trial against Google. Anmuth said he expects the DOJ to file a "wide-ranging and far-reaching set of potential remedies, most likely more than the DOJ thinks it could ultimately win."

The JP Morgan analyst sees five potential remedies which could include:

  • No exclusive default search agreements for Google across all browsers, OEMs and carriers
  • The separation of Android & Chrome from Google
  • The separation of Google Search ads from Google
  • Limitations on how Google can implement AI in search
  • Data sharing, including providing API or patent access to search competitors
Anmuth predicted Google could see up to a 10% hit on its earnings per share due to these changes and noted the stock has underperformed the market since the judge ruled against the company on Aug. 5. He pointed to the likely negative impacts of the remedies on Alphabet's revenue, earnings and overall competitive positioning as drivers of the stock's recent underperformance.

JP Morgan said it remains bullish on Google's search growth, progress in GenAI and maintained Alphabet with an Overweight and a price target of $208. However, the firm said it prefers Amazon, Inc. (NASDAQ: AMZN) or Meta Platforms, Inc. (NASDAQ: META) among the mega-caps as Alphabet shares could be range-bound for an extended period of time.

GOOG Price Action: According to Benzinga Pro, Alphabet shares are down 0.82% at $167.17 at the time of publication Monday.