To The Moon

📈 Google Beats DOJ! Still Undervalued at $230?

A courtroom drama just gave Google $Alphabet(GOOG)$   the kind of win that could reshape its stock narrative. A U.S. federal judge rejected the Department of Justice’s request to break up Chrome and Android, ending fears (for now) that regulators might dismantle two of Alphabet’s most powerful businesses. The decision sent shares 7% higher in after-hours trading, reminding investors that even in the face of antitrust scrutiny, Google’s ecosystem remains intact — and perhaps undervalued.

But is this rally a buying opportunity, or just a relief bounce? Let’s unpack the story, the numbers, and what it means for your portfolio.

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🏛️ The DOJ Case and Why It Mattered

For months, investors watched nervously as the DOJ pushed to unwind what it saw as monopolistic control of internet browsing and mobile ecosystems. Chrome, with over 60% global browser share, and Android, powering ~70% of smartphones, were clear targets.

A forced breakup would have been catastrophic, potentially stripping Google of its distribution moat and threatening ad revenue streams tied to search and mobile. The judge’s rejection, therefore, didn’t just preserve Google’s dominance — it reaffirmed that its integration strategy still holds legal water in the U.S.

For retail investors, that’s huge: regulatory overhang has been one of the biggest reasons Alphabet trades at a discount to peers like Microsoft or Nvidia. This ruling eases some of that pressure.

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📊 Where the Stock Stands: $230 and Counting

At around $230, Alphabet looks surprisingly cheap compared to its “Mag 7” peers. Its forward P/E ratio is in the low 20s, compared to ~30 for Microsoft and over 40 for Nvidia.

Yes, Google’s core advertising growth has slowed, but it’s still printing tens of billions in free cash flow each quarter. Meanwhile, Google Cloud just turned profitable in 2024 and continues to gain traction, especially as enterprises adopt AI tools.

In other words: investors aren’t just buying a search engine. They’re getting a diversified giant with:

Ads: Still the cash cow (YouTube + Search dominate globally).

Cloud: $10B+ revenue run rate, with profitability finally improving.

AI: Bard, Gemini, and enterprise AI tools are in roll-out mode.

Other Bets: Long shots like Waymo (self-driving) that could unlock value later.

So why the discount? Bears point to regulatory risks, a more cautious growth outlook, and competition from TikTok (ads) and Microsoft (AI).

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⚖️ Bulls vs Bears: The Debate After DOJ

🚀 The Bull Case

Regulatory breathing room: This ruling buys Alphabet time to scale AI without major disruption.

Undervaluation: At current multiples, Google looks like the cheapest way to play Mag 7.

AI upside: Cloud + AI integration could accelerate revenue growth over the next 2–3 years.

Cash machine: With $100B+ in cash reserves, Google can fund buybacks, R&D, and M&A.

⚠️ The Bear Case

Not out of the woods: Europe’s Digital Markets Act and further U.S. suits could still bite.

Slower growth: Ad growth decelerated to high single digits — much lower than peers.

Competition: Microsoft’s Copilot and Nvidia’s AI leadership may steal the AI spotlight.

Margin pressure: Heavy AI investments could weigh on profitability near-term.

For retail investors, this creates the classic setup: undervalued but not risk-free.

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💡 Lessons from Past DOJ Battles

History shows that regulatory scares often trigger short-term volatility but rarely kill mega-cap tech. Microsoft in the early 2000s faced a DOJ breakup attempt that dragged on for years. The company didn’t split, and patient investors who bought during the cloud of litigation ended up sitting on 10x+ returns once Azure took off.

Could Alphabet follow a similar arc? That’s the bet bulls are making: short-term regulatory noise, long-term dominance powered by AI and ads.

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🔮 What’s Next for Investors?

The next big catalysts:

AI product updates: Watch how quickly Bard/Gemini gains user adoption.

Cloud growth: Can Google close the gap with AWS and Azure?

Macro: If the Fed cuts rates later in 2025, Big Tech could see another wave of inflows.

Buybacks: Alphabet has been aggressive here, and more could come given its balance sheet.

If the DOJ ruling marks a turning point, $230 may look cheap in hindsight. But if regulatory headwinds return — or if AI adoption disappoints — that discount could stick.

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🤔 Community Questions

1. Could this courtroom victory finally free Alphabet to double down on AI and cloud without distraction?

2. At $230, do you see Google as undervalued compared to its Mag 7 peers — or fairly priced given slower growth?

3. If you had to pick one AI play today, would it be Google, Microsoft, or Nvidia?

4. Would you buy Alphabet now, wait for a dip, or avoid entirely due to ongoing regulatory risks?

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📌 Takeaway: Google just dodged a bullet. Its stock remains cheaper than most mega-cap tech, yet the AI story is only beginning. For some, that makes $230 look like a gift. For others, it’s just a temporary rally before the next headline risk.

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