It's time to blow up Alphabet so holders of Google stock can maximize total shareholder value, said a D.A. Davidson analyst on Monday. Google stock rose amid a broad market rally sparked by positive U.S./China trade news.
D.A. Davidson analyst Gil Luria, who rates GOOGL stock neutral, called for a complete Alphabet breakup in a report. His comments come amid two Department of Justice antitrust cases versus Alphabet, one focusing on the internet search business the other on its advertising business.
"Investors want a big-bang breakup, not isolated spinoffs," Luria said. "We believe the company is headed towards an eventual passive aggressive spin off of (advertising) network and possibly Chrome/Android to appease Department of Justice, likely only after they drag their feet for a while."
He added: "We realize that a breakup would cause dis-synergies and that management is trying to maximize profit at the Alphabet level, but investors are much more interested in total shareholder value, not short-term profits. Until management acts in the interest of shareholders, the entire business will trade at 16 times earnings, which assigns zero value to Waymo and severely undervalues YouTube, cloud and the ad network."
Federal judge Leonie Brinkema in April ruled that Google-parent Alphabet has used classic monopoly-building tactics to dominate online advertising
Also, federal judge Amit Mehta last year ruled that Alphabet illegally maintained a monopoly over online search services and prevented rivals from developing their own products.
A key part of the ruling centered on multibillion-dollar payments that Google makes to Apple. The DOJ has requested that Google be forced to sell its Chrome browser and take other measures, possibly involving Apple.
Meanwhile, the internet search business has been a worry for Google investors amid new artificial-intelligence-driven competition from OpenAI's ChatGPT and others. 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 AI Overviews system uses Google's in-house Gemini AI model.
"Google Search ad revenue growth could persist well past the point the business is damaged since advertisers still don't have an alternative," Luria said. "Only after Apple switches defaults and ChatGPT comes in and ChatGPT turns on ads, will we see the impact on revenue. That may take several quarters, which means the overhang is not going away."
On the stock market today, Google stock climbed 3% to 157.34 in morning trades. In 2025, Google stock has retreated 16%.
Google stock holds an IBD Composite Rating of 74 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
