Google-parent Alphabet is the IBD Stock of the Day as investors await a federal judge's ruling on legal remedies in an antitrust case. Google stock has gained nearly 7% in 2025, rebounding from a lackluster first half of the year
On the stock market today, Google stock climbed 2.5% to close at 201.42. With the gain, Google stock has cleared a cup-with-handle buy point of 197.95. Its relative strength line isn't at highs, but has markedly improved.
The impact of generative artificial intelligence on the internet search advertising business of Google remains a key issue for investors. Also, investors may want to be cautious, as a ruling from a federal judge in an antitrust case is expected in August. One strategy around earnings would be to use call options.
Antitrust Remedy Ruling Expected
Federal judge Amit Mehta has ruled that Alphabet illegally maintained a monopoly over online search services and stymied rivals from developing their own products. Sometime in August, Mehta is expected to decide what legal remedies are required.
The Department of Justice has requested that Google be forced to sell its Chrome browser. Mehta also could take action on multibillion-dollar payments that Google makes to Apple to be the default search engine on iPhones.
"We continue to believe that most outcomes, save for a Chrome divestiture, will have a relatively small impact on Google's distribution and use of its products," said RBC Capital analyst Brad Erickson in a report.
At JPMorgan, analyst Doug Anmuth said in a recent report: "We believe investors expect the ending of exclusionary practices and the preloading of Google search across Apple and third-party browsers. There is more uncertainty, however, around whether the court will allow Google to pay for nonexclusive distribution of Google search or force Chrome divestiture."
Google is expected to appeal any unfavorable ruling.
Google Stock: AI Competition
Meanwhile, competition from OpenAI's ChatGPT, Perplexity and others has forced Google to overhaul its search results. ChatGPT delivers answers to search queries, while Google's business model has been based on providing web links.
Google began deploying AI Overviews in the U.S. in mid-2024, with conversational summaries topping links for many search queries. The long range question is how Google search ad revenue growth will be impacted by the AI Overviews format.
Alphabet's second quarter earnings rose 22% to $2.31 per share while gross revenue rose 14% to $96.43 billion, topping expectations.
In Q2, Google's Q2 internet search-advertising revenue came in at $54.19 billion, topping estimates of $52.915 billion. Cloud computing revenue of $13.62 billion was up 32% from a year earlier, versus estimates of $13.14 billion.
Artificial intelligence-related workloads — training AI models and processing AI apps — were a big driver of cloud revenues. Google said it expects capital spending to reach $85 billion in 2025, up over 60%. Much of the capital spending will go to computer servers and other AI-related infrastructure.
Meanwhile, YouTube ad revenue in Q2 was $9.79 billion, topping estimates of $9.58 billion.
In March, Alphabet agreed to buy fast growing cybersecurity firm Wiz in an all-cash $32 billion deal. One question for Google stock is whether the Wiz purchase will boost cloud computing market share versus Amazon.com and Microsoft.
Google Stock Technical Ratings
The company's Relative Strength rating currently stands at 82 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or better.
Google stock holds an Accumulation/Distribution Rating of B-minus. That institutional ownership rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Further, shares hold an IBD Composite Rating of 95 out of a best possible 99. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths.
Meanwhile, GOOGL stock has a stellar 21-day ATR of 2.12%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
