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Alphabet (GOOG, GOOGL) stock could drop between 15% and 25% if US District Judge Amit Mehta orders Google to sell off its Chrome browser, Barclays analysts have said.
In August, Google lost a landmark antitrust trial against the US Department of Justice. Judge Mehta found the tech giant liable for monopolizing the search engine market — specifically, the markets for "general search" and "general search text" ads, which appear at the top of the search results page.
On Friday, Google and the DOJ wrapped up closing arguments in the remedies phase of the case. The agency's lawyers argued that Mehta should force Google to divest its Chrome web browser as well as share its search data with rivals and ban exclusivity agreements that secure Google as the default search engine on mobile devices and browsers.
Barclays analyst Ross Sandler wrote in a Monday note that “the probability of a Chrome divestiture, while low, has increased in our view,” following the closing arguments. He added that “the most likely candidates” to buy Chrome would be “well-funded AI companies like OpenAI, Anthropic or perhaps Perplexity.”
Such an outcome would be “a major blow” to Google, given that Chrome has 4 billion users and represents 35% of Google’s search revenue, Sandler noted.
Alphabet stock dropped 1.6% early Tuesday, adding to a drop of 1.4% on Monday. Shares are down 12% year to date.
“This would be a major development, a black swan event for GOOGL shares,” he said. “Shares would obviously trade off significantly if this were to play out as no investors we speak to are thinking this remedy plays out.”
Sandler said a Chrome divestiture would not only cause Alphabet stock to tumble as much as 25% but would also result in a potential 30% hit to Alphabet’s earnings per share.
“The reality is we don't know what the court is going to decide on remedies, we listened to the entire day of closing arguments and there were certainly times where we felt a lot worse than we did prior, and other times where we felt better (in terms of GOOGL stock price impact),” Sandler said. He holds an Overweight rating on the stock.
Mehta is expected to decide on a remedy in the case — and the fate of Google’s search empire — in August. Google said Saturday that it will appeal the case.
Separately on Monday, Alphabet said it agreed to spend $500 million to change its compliance structure in order to settle a case with shareholders accusing the company of antitrust violations.
Yahoo Finance's Alexis Keenan and Dan Howley contributed to this story.
