Barclays Says Alphabet Could See Shares Fall As Much as 25%

Sophia Reyes · June 2, 2025 2:29 PM

Alphabet (GOOG, GOOGL) stock could fall by 15% to 25% if U.S. District Judge Amit Mehta orders the company to divest its Chrome web browser, according to a note from Barclays analysts released Monday.

The warning follows Google’s loss in a landmark antitrust case in August 2024, where Judge Mehta ruled the company had unlawfully monopolized the search engine market—specifically in the areas of general search and general search text ads, which typically appear at the top of search result pages, as reported by Yahoo Finance’s Alexis Keenan.

Last Friday, Google and the U.S. Department of Justice concluded closing arguments in the remedies phase of the trial. The DOJ is seeking major structural changes, including forcing Google to spin off Chrome, share search data with competitors, and end exclusive agreements that make Google the default search engine on mobile devices and browsers, Yahoo Finance’s Dan Howley and Keenan reported.

Barclays analyst Ross Sandler noted that while the chances of a Chrome divestiture remain low, they have increased following the closing arguments. He suggested that potential buyers for Chrome could include well-funded AI companies such as OpenAI, Anthropic, or Perplexity.

Sandler described a forced Chrome sale as a “major blow” to Google, pointing out that Chrome has roughly 4 billion users and contributes about 35% of the company’s search revenue. He also warned that such an outcome could reduce Alphabet’s earnings per share by up to 30%.

“This would be a major development—a black swan event—for GOOGL shares,” Sandler wrote. “A divestiture would likely cause a significant drop in the stock, as virtually none of the investors we speak with expect this kind of remedy.”

Sandler, who maintains an Overweight rating on Alphabet, added that the firm listened to the full day of closing arguments and came away with mixed impressions: “At times, we felt worse than before about the stock’s prospects, and at others, a bit more optimistic.”

Judge Mehta is expected to issue a final decision on remedies in August. Google has stated it plans to appeal the ruling.

Separately on Monday, Alphabet announced a $500 million settlement to resolve a shareholder lawsuit accusing the company of antitrust violations. As part of the agreement, Alphabet will overhaul its compliance structure.

Google has agreed to invest $500 million over the next decade to revamp its compliance systems, as part of a settlement to resolve shareholder litigation accusing the company of antitrust violations, according to newly filed court documents.

The preliminary agreement, filed late Friday, resolves a derivative lawsuit against executives of Alphabet Inc., Google’s parent company. Named in the suit were Alphabet CEO Sundar Pichai and co-founders Larry Page and Sergey Brin.

The proposed settlement, which still requires approval from U.S. District Judge Rita Lin in San Francisco, includes significant structural reforms:

• A new, independent board committee dedicated to overseeing risk and compliance, previously handled by the audit and compliance committee.

• A senior vice president-level regulatory and compliance committee reporting directly to CEO Pichai.

• A new internal compliance committee composed of Google product leaders and compliance experts.

Alphabet has denied any wrongdoing. “We’ve long invested in strong compliance programs,” the company said Monday. “To avoid extended litigation, we’re willing to make these commitments.”

The lawsuit, led by two Michigan-based pension funds, alleged that Alphabet’s leadership breached fiduciary duties by exposing the company to antitrust risks in areas such as search, advertising technology, Android, and app distribution.

Shareholder attorneys praised the outcome. “These reforms amount to a sweeping transformation of Alphabet’s compliance infrastructure,” they said, calling it a “deep cultural shift” rarely achieved through shareholder actions.

Under the deal, the reforms must remain in effect for at least four years. Shareholders will not receive direct monetary compensation, though their lawyers plan to request up to $80 million in legal fees and expenses.

Patrick Coughlin, an attorney for the shareholders, said the board lacked critical information about antitrust risks. “They should have been better informed and acted sooner,” he noted.

Alphabet shares fell 1.5% on Monday and are down 10.6% year to date.