Alphabet (GOOGL) shares are red-hot Wednesday after a federal judged ruled in the tech conglomerate's favor.
Specifically, U.S. District Judge Amit P. Mehta barred the company from signing exclusive search engine deals, but stopped short of requiring it to divest Google's Chrome browser.
While banning Alphabet from entering new deals, Mehta allowed the company to maintain current agreements, including one with Apple (AAPL) that allows Chrome to be the default search engine in its Safari browsers.
Last summer, Mehta ruled that Google had unlawfully maintained a monopoly in search and text advertising and that its distribution agreements were "exclusive and have anticompetitive effects."
And in November, Department of Justice officials expressed their support for forcing Google to sell Chrome.
But in his ruling on Tuesday, Mehta admitted that the marketplace is changing, due in part to the emergence of artificial intelligence (AI). "There are strong reasons not to jolt the system and to allow market forces to do the work," he wrote.
Still, the ruling requires that Google now share its Chrome search data with competitors.
"Today's decision recognizes how much the industry has changed through the advent of AI, which is giving people so many more ways to find information," Google said in a statement. "Now the Court has imposed limits on how we distribute Google services, and will require us to share Search data with rivals. We have concerns about how these requirements will impact our users and their privacy, and we're reviewing the decision closely. "
What does Wall Street say about Google stock?
Wall Street never seemed too worried about the antitrust case against Alphabet. Heading into Wednesday's session, GOOGL stock was up 30% year over year, nearly doubling the return of the broader S&P 500.
And of the 65 analysts tracking the communication services stock who are followed by S&P Global Market Intelligence, 54 say it's a Buy or Strong Buy, 11 have it at Hold and not a single one rates it at Sell. This works out to a high-conviction consensus Buy recommendation.
Wedbush analyst Scott Devitt is one of those with an Outperform (Buy) rating on GOOGL stock.
The outcome of the case "is broadly favorable for Google, in our view, with the court ruling against the most severe remedy proposals introduced by the DOJ," Devitt writes in a note to clients.
As for GOOGL stock, the analyst believes "there is a compelling case for multiple expansion in the coming quarters and the discount relative to peers is unwarranted."
Devitt notes that Tuesday's ruling eliminates a major overhang for Alphabet and that "management is repositioning the business as a winner in the AI space, with strong demand trends and an acceleration in Cloud growth."
The analyst adds that he is "increasingly constructive in the longer-term durability of Google's Search business," and lifted his price target to $245 from $225, representing implied upside of nearly 16% to GOOGL stock's September 2 close.
