Bank of America raises price targets for Alphabet and Apple after Google avoids antitrust breakup

Bank of America raised its price targets for Alphabet and Apple, citing a U.S. District Court ruling that prevented a major break-up for Google in its antitrust case. Alphabet's target increased to $252 (19% upside) as it avoids divesting Chrome and can continue significant traffic acquisition cost (TAC) payments, preserving its search distribution and monetization. Apple's target rose to $260 (13% upside) as the decision solidifies its services revenue estimates, allowing Google to remain the default search engine on iPhones. This outcome, which saw Alphabet shares jump 6% and Apple 3% premarket, is viewed as a significant positive for both companies, preserving Google's core business model and strengthening Apple's recurring revenue streams.

Analysis

A U.S. District Court ruling against the most severe antitrust remedies proposed for Google has provided a significant catalyst for both Alphabet (GOOGL) and Apple (AAPL). Bank of America consequently raised its price target on Alphabet to $252, implying 19% upside, after the court decided against a forced divestiture of its Chrome browser. This allows Google to maintain its search distribution model through Traffic Acquisition Cost (TAC) payments, a key point highlighted by BofA analyst Justin Post, who noted that partners like Apple have little incentive to switch from Google's superior monetization platform. The ruling, which sent Alphabet shares up 6% in premarket trading, also shifts focus to other catalysts like the progress of its Gemini AI and search usage growth, which could drive further multiple expansion. For Apple, the decision solidifies services revenue estimates, leading BofA to increase its price target to $260, or 13% upside. Analyst Wamsi Mohan noted that Google's ability to continue paying for default search placement on iPhones, even on a one-year basis, preserves a crucial, high-margin revenue stream for Apple, which saw its stock rise 3% premarket. This legal clarity removes a major overhang for both tech giants, reinforcing the stability of Google's core business and a key component of Apple's services growth narrative.

Key Decisions for Investors

• Investors should recognize the antitrust ruling as a significant de-risking event for Alphabet, validating its core search distribution model and shifting focus back to fundamental catalysts like AI-driven growth and potential for stock multiple expansion.
• For Apple, the preservation of Google's default search engine payments provides greater certainty for its high-margin services revenue, offering a key positive data point for a stock that has underperformed year-to-date and may warrant a re-evaluation of its services growth trajectory.
• While the ruling is favorable, the stipulation of one-year contracts for default placements introduces a recurring, albeit manageable, renewal risk that investors in both Alphabet and Apple should monitor going forward.