Alphabet Stock Could Drop 25% If Judge Orders Chrome Divestiture

Alphabet is facing a significant regulatory risk as a federal judge considers ordering Google to divest its Chrome browser, which could lead to a 15% to 25% drop in the company's stock value. Chrome, with 4 billion users, accounts for about 35% of Google's search revenue, making the proposed divestiture a major financial blow that could reduce Alphabet's earnings per share by up to 30%. The antitrust case stems from a ruling that found Google guilty of monopolizing the search engine market, and the Department of Justice is advocating for structural remedies including the sale of Chrome and sharing of search data. Barclays analyst Ross Sandler identified well-funded AI companies like OpenAI, Anthropic, or Perplexity as potential buyers of Chrome, positioning them to challenge Google's search dominance. Despite the risks, Sandler maintains an overweight rating on Alphabet stock, although investor sentiment has grown bearish amid uncertainty. The judge's decision on remedies is expected in August 2024, with Google planning to appeal the original ruling.