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Should Google consider breaking up? Analyst says it’s the ‘best thing to do’

by April 26, 2025
by April 26, 2025

Alphabet Inc (NASDAQ: GOOGL) has been contending with the Department of Justice over its proposal to break up the company, citing the firm’s illegal monopolies in areas like search and advertising. 

However, doing what the DOJ is asking may actually prove to be a positive for Google in the long run, says Gil Luria, a senior analyst at D.A. Davidson. 

“The best thing Google could possibly do is lean into what the DOJ is asking them to do, and just break up the company,” he told CNBC in an interview this week. 

Luria’s remarks arrive at a time when Google shares are grappling with a tariffs-driven retreat in the US tech stocks.

At the time of writing, GOOGL is down nearly 20% versus its year-to-date high. 

Why does Luria want Google to break up?

Luria is in favour of a breakup since Google’s search business is wrestling with a bunch of headwinds in 2025. 

For starters, AI-enabled assistants, particularly the world-renowned ChatGPT, are stealing users from Google Search, which may eventually drive advertisers to OpenAI as well. 

“At some point, OpenAI is going to turn on advertising, and advertisers are going to start shifting some of their spend away from Google. It could very well happen later this year,” the analyst added. 

Against such a backdrop, he recommended that Google break up to free its other businesses from the search-related overhang. 

Luria’s view on Google’s other businesses

According to Gil Luria, the tech behemoth has multiple other immensely valuable businesses. These include YouTube, Google Cloud, and Waymo. 

In fact, he expects the value of the company could even double if Google were to break up. 

Investors should note, however, that none of the titan’s other segments contribute nearly as much to its overall revenue as “Search”. 

Waymo is still unprofitable, and the cloud business has turned profitable only recently. So, the search unit is pretty much the profit engine for Google. 

Google’s Q1 earnings highlights

In related news, Alphabet Inc reported its financial results for the first quarter on April 24th. Here are the firm’s key Q1 numbers:

  • $90.23 billion in revenue – better than $89.12 billion expected
  • $2.81 a share of adjusted earnings – better than $2.01 expected
  • $8.93 billion in YouTube ads revenue – weaker than $8.97 billion expected
  • $12.26 billion in Google Cloud revenue – marginally below $12.27 billion expected
  • $13.75 billion of traffic acquisition costs – higher than $13.66 billion expected

While the multinational topped estimates for overall profit and revenue in the fiscal first quarter, D.A. Davidson continues to rate Google stock at “neutral” with a price target of $160, which indicates potential downside of more than 5% from here. 

The post Should Google consider breaking up? Analyst says it’s the ‘best thing to do’ appeared first on Invezz

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