The search monopoly ruling welcomes a "major victory" as Wedbush is bullish on Apple and Alphabet

According to the Zhitong Finance APP, Wedbush pointed out that the ruling by a U.S. federal judge in the search agreement antitrust case is a "major victory" for Alphabet (GOOGL.US) and Apple (AAPL.US). Wedbush maintained its "outperform" rating on Apple and set its target price at $270. Wedbush also maintained its "outperform" rating on Google but raised its target price from $225 to $245.

The U.S. judge did not prohibit Apple from its lucrative search agreement with Google, which brings approximately $20 billion in revenue to the iPhone manufacturer each year. Although Judge Amit Mehta ruled in an antitrust case that Google cannot enter into exclusive internet search agreements, it allowed Google to reach default search engine agreements with browser developers.

Analysts led by Daniel Ives stated, "Google and Apple have just received a significant victory from the court, which ruled that the ongoing $20 billion search business agreement between the two giants will continue to be valid and will not be prohibited in its current form. This case had cast a shadow over Apple's stock, while investors were concerned that Google might be forced to split its Chrome browser or terminate its search agreement with Apple, which could have happened."

The analysts added, "This is a huge victory for Apple, and for Google, it is a perfect ruling that eliminates the significant uncertainty surrounding the company's stock."

These analysts pointed out that, theoretically, Google cannot enter into "exclusive agreements" with third parties (for search services). However, this situation lays the groundwork for Apple to continue its existing agreement and is likely to encourage Apple to further strengthen its cooperation with Google's Gemini platform in the field of artificial intelligence in the future.

Ives and his team stated, "This collaboration will have some adjustments, but overall, it eliminates the $25 adverse pricing factor we saw on Apple's stock. In our view, the market will digest this news very optimistically, as this ruling has finally settled, after years of speculation."

As for Google, the aforementioned analysts noted that Google does not need to give up the Chrome browser and can continue to sign agreements with distribution partners to achieve pre-installation or deployment of its products.

Ives and his team stated, "From our perspective, this outcome is generally favorable for Google, as the court rejected the most severe penalty proposal put forth by the U.S. Department of Justice."

The analysts believe that the conditions for Google to achieve multi-faceted expansion in the coming quarters are very favorable, and the discount compared to its peers is unreasonable. This is because the judge's ruling eliminated potential risks associated with the most unfavorable regulatory outcomes for Google; concerns about the impact of generative artificial intelligence on business are gradually diminishing, as Alphabet has confirmed its ability to navigate this transitional period; and management is repositioning the company as a winner in the field of artificial intelligence, with strong demand trends and accelerated growth in cloud business Analysts stated: "We believe that the market's focus will shift to Google's positioning relative to its large peers. We emphasize that Google's stock price has consistently been lower than that of Meta (META.US). Based on today's announcement, we are increasingly optimistic about the long-term robustness of Google's search business and have accordingly raised our expectations."