Alphabet under Pressure: US Government Plans Possible Breakup

The shares of the online advertising giant Alphabet came under pressure in morning trading and recorded a price loss of 2.5 percent. The background is reports that the U.S. Department of Justice is considering breaking up Google's business segment and is evaluating other options. According to a court filing by the government, this is intended to prevent Google from using products like Chrome, Play, and Android to gain an advantage over competitors or new market entrants, in order to promote its search engine and related features, including artificial intelligence. Previously, a federal judge determined in August 2024 that Google had violated U.S. antitrust law. Google then responded critically in a blog post: "We believe that today's plan goes far beyond the legal framework of the court's decision on distribution agreements. Such government action in a dynamic sector could unintentionally have negative consequences for American innovation and consumers. We look forward to presenting our arguments in court." The stock market often reacts impulsively to news, and strong price losses can present good opportunities to buy high-quality stocks. Whether now is the right time to invest in Alphabet remains to be seen. The volatility of Alphabet's shares is not new; last year there were 19 movements that exceeded 2.5 percent. In this context, today's price movement is significant, but not dramatic enough to change the fundamental assessment of the company. Since the beginning of the year, Alphabet is up 16.5 percent, but with a current price of $160.98 per share, it is still 15.8 percent below the 52-week high of $191.18 in July 2024. Investors who invested $1,000 in Alphabet shares five years ago now see a value of $2,678. In the meantime, there may be no way around generative AI, which will massively influence the business practices of large companies. While Nvidia and AMD are trading near their all-time highs, we are betting on a lesser-known, yet profitable semiconductor stock that benefits from the rise of AI.