Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
Global Head of Investment Strategy
Alphabet has just walked away from one of the biggest antitrust showdowns in decades without the structural breakup many feared. A US judge has ruled that Google will not be forced to divest its Chrome browser or Android operating system. Markets celebrated, with Alphabet adding USD 230 billion in value in a single day, its biggest jump in history.
The ruling is more than a legal twist. For investors, it is a defining moment in the balance of power between Big Tech, regulators, and the rise of artificial intelligence.
The judge’s decision brought the long-running search monopoly case to its conclusion. While Google was found guilty last year of maintaining an illegal monopoly in online search, the penalties imposed this week were lighter than many expected. Instead of dismantling parts of the business, the court ordered Google to share data with rivals and stop signing exclusive distribution deals. Crucially, it can still pay Apple billions to remain the default search engine on iPhones — provided those deals aren’t exclusive. So, while the government brought a sword to the fight, the judge handed Google a shield.
The market reaction was immediate. Alphabet’s shares surged more than 9% to an all-time high of USD 230, lifting its market value to USD 2.8 trillion. Apple also climbed nearly 4%, adding USD 130 billion in value. The rally pulled up the Nasdaq as well, highlighting how much regulatory risk had been priced into Big Tech.
Investors had braced for a worst-case scenario involving a forced sale of Chrome or Android. That overhang has now lifted. Markets hate uncertainty — and this ruling was a thunderclap of relief.
For investors, the significance lies less in the legal detail and more in what it signals. First, the regulatory risk premium that had weighed on Alphabet has eased. The company’s most profitable engines remain intact, allowing it to continue generating the cash flows that underpin its valuation. Second, artificial intelligence has officially entered the regulatory conversation. The judge explicitly cited competition from OpenAI, Perplexity and other AI challengers as a reason not to impose harsher remedies.
“This wasn’t just about Chrome or Android — it was about whether AI has already eroded Google’s monopoly.”
The ruling also exposes the limits of current antitrust law. The United States has not broken up a monopoly in more than four decades, and this case shows why. Tools designed for railroads and oil trusts are blunt instruments when applied to data-driven markets. Even when monopolisation is proven, judges remain reluctant to impose structural remedies in industries being reshaped by fast-moving technologies.
Apple’s fortunes are equally bound up in this. Its USD 20 billion-a-year deal with Google to keep the search bar on iPhones untouched survived intact. In that sense, the ruling protected the economics of two of the world’s most valuable companies.
Looking ahead, the outlook for Alphabet can be framed in three scenarios.
In the base case, Google remains dominant in search, integrates its Gemini AI products across platforms, and weathers the next waves of regulatory scrutiny.
In the bull case, AI monetisation proves more lucrative than expected, search revenues hold firm, and the stock re-rates closer to other mega-caps.
In the bear case, Apple shifts to another search partner, AI rivals chip away at market share, and Google is forced to divest parts of its advertising business in a separate trial later this year.
The most obvious winners are Alphabet itself, Apple, and the investors who held their nerve. The decision preserved the core business model of both companies and unlocked a record rally. The losers are smaller search competitors, who had hoped for more sweeping remedies, and the Department of Justice, which secured a symbolic victory but failed to break up the company.
This is not the end of Alphabet’s regulatory battles. The Justice Department could still appeal, a process that might drag on for years. More importantly, the company faces another case in Virginia over its dominance in digital advertising. That trial could yet result in forced divestitures, putting a different part of Alphabet’s empire on the chopping block.
Meanwhile, Google now has the green light to expand its Gemini AI products across billions of devices. Having moved cautiously while the case was pending, the company is likely to accelerate distribution deals, starting with Apple’s iPhone. The battleground is shifting from search to AI — and the ruling gives Google more firepower to fight it.
For investors, several lessons stand out. Alphabet has de-risked in the short term, with the immediate threat of a breakup removed. AI is now the competitive arena that will determine whether Google remains as dominant in the next decade as it was in the last. Regulation is not finished — the ad tech case looms large. And valuation matters: Alphabet’s discount to peers could either represent hidden opportunity or a sign of persistent headwinds.
The ruling is not the end of Google’s legal troubles, but it is a decisive moment. Alphabet has dodged the axe and gained breathing space to double down on AI. For regulators, the case highlights the difficulty of reining in companies whose dominance is being reshaped by new technology before the ink is dry.
For investors, the message is clear: volatility will come and go, but the real drivers of long-term value are the structural shifts — from search to AI, from regulation to monetisation. This chapter may be closed, but the story of Alphabet’s dominance is far from finished.