Evercore and JMP paint a worst-case scenario for Alphabet amid DOJ antitrust trials

At least two Wall Street analysts reiterated their bullish rating on Alphabet stock (NASDAQ:GOOGL) over the weekend and weighed in with commentary on the antitrust cases surrounding the tech giant and the possible impact from it on the company’s earnings.

Evercore ISI believes probable medium-term uncertainty on GOOGL over the DOJ anti-trust trials and their likely remedies will limit the potential for any near-or-medium-term material re-rating.

The research firm said even under its “worst case” scenario—where Google is no longer allowed to bid for exclusive search distribution deals in the U.S. and loses up to 60% market share—the impact to GOOGL EPS could still only be in the single-digit percentage range, as the likely material savings in traffic acquisition costs of more than $20B from elimination of the deals would offset a significant amount of the lost search revenue.

Looking at comparable examples of default search distribution being changed, like Firefox in 2014 and in 2021, a potential loss of 20% to 50%+ market share for Google on its exclusive search distribution access points is very likely, they said.

On the search case, Evercore thinks there is a very significant possibility that Judge Mehta’s injunction will include the elimination of Google’s exclusive distribution deals, and based on Microsoft executives’ public statements and past actions, Evercore believes it highly likely that Microsoft would bid to capture those deals that Google has held for many years.

Analysts at JMP also reaffirmed their “Market Outperform” rating and believe the market has fully factored in the risk of an adverse antitrust penalty that limits Google’s ability to bid on default search placements.

“Specifically, we believe an antitrust penalty that limits Google’s ability to bid on default search placements represents a potential $1.23 headwind to EPS, which equates to 12% of consensus 2026E EPS of $10.08,” JMP said in their September 15 note.

“With overall search demand seeing benefits from AI and YouTube estimates derisked, in our view, cloud demand broadly healthy, aided by incremental AI demand, and cost efficiencies still early, with a new CFO reviewing Alphabet’s cost structure, we continue to recommend shares, especially given the recent pullback, as we believe it more than accounts for the potential impact to EPS,” they added.

JMP stuck to its price target of $200 on GOOGL, while Evercore trimmed PT to $200 from $225, representing an upside of 27%. Stock is up 13% so far this year, while the S&P 500 rose 18%.