Alphabet Shares Face Months of Uncertainty on New Breakup Risk
The stock has fallen recently on concerns about heavy AI spending
Some see Google’s breakup as ultimately unlocking more value
Tweet on Alphabet stock fluctuation
Alphabet Inc. investors are facing a long period of uncertainty as they grapple with a scenario they previously saw as unlikely: a possible breakup of Google.#google #alphabet #shares pic.twitter.com/1jD189MQj6
— The_Journalbiz (@the_journalbiz) August 16, 2024
Bloomberg chart
The Justice Department is considering a bid to break up Google, Bloomberg News reported, with the most likely units for divestment the Android operating system and the Chrome web browser. The news surprised Wall Street, which had seen a breakup as unlikely even after a federal judge ruled earlier this month that Google has illegally monopolized the search market.
While dismantling the company is only one of the options that the Justice Department is looking at, the news adds risk when investors have already been on edge about Big Tech’s prospects. And with the company planning to appeal the search market antitrust ruling, any overhang on Alphabet’s stock could last for some time.
“There’s a lot of uncertainty about how this will resolve itself, and an answer won’t come for months,” said Howard Chan, chief executive officer at Kurv Investment Management. “Alphabet is still a strong business, and it will still generate revenue until there’s a resolution, but this also comes at a time when there are a lot of questions about AI and search. We should expect more volatility from here.”
The shares fell 2.3% on Wednesday, erasing more than $47 billion in value, with the Justice Department news overshadowing Google’s unveiling of AI-infused devices that will beat Apple Inc.’s iPhone 16 to the market. The stock is down 16% from its July peak, though it remains up 15% this year.
