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Alphabet (NASDAQ:GOOG) tumbles 7% as Barclays warns DOJ trial remedies could shave up to 19% off 2027 earnings.
Barclays analyst Ross Sandler is flagging long-term risks from the ongoing DOJ antitrust trial, where Google's browser and device default dealsespecially with Apple and Samsungare at issue. During opening statements, Apple's (AAPL) Eddy Cue hinted at an AI-powered search tool for Safari and interest in rivals like Perplexity and Anthropic, stoking fears that Google could lose its lucrative default-search slots.
Sandler estimates global enforcement of behavioral remedieslosing paid-search access and forced ad syndicationcould cut Alphabet's gross profit by 15% (or about 7.5% if U.S.-only), translating to as much as a 19% hit to 2027 EPS.
Despite the sell-off, Sandler remains bullish, keeping a Buy rating and a $220 price target, citing Alphabet's AI leadership, diversified ad ecosystem and healthy balance sheet. He argues that even with share-loss scenarios, Google's core search engine moat and growing cloud division provide a cushion against profit erosion.
Why it matters: Investors face heightened uncertainty around Google's antitrust outcome, which could meaningfully dent ad revenues and force structural changemaking the stock's risk/reward profile more volatile.
Investors will be watching trial developments and any preliminary remedy proposalsexpected later this yearto gauge the true impact on Alphabet's bottom line.
This article first appeared on GuruFocus.