Alphabet Inc., the parent company of Google, continues to be a dominant force in global equity markets. However, its impressive run is facing a significant challenge from European regulators, who have launched a dual-front investigation into the tech giant’s business practices. Investors are now weighing whether these legal headwinds could disrupt the stock’s substantial year-to-date gains.
EU Launches Twin Probes
The European Commission has initiated a formal investigation focusing on whether Google violated EU competition rules. Regulators are examining if the company used content from web publishers and YouTube videos to train its artificial intelligence models without providing adequate compensation or a clear opt-out mechanism for copyright holders.
This inquiry is not the only regulatory concern. Reports indicate Alphabet faces a potential separate fine in the coming year for alleged breaches of the Digital Markets Act (DMA). The core allegation is that Google systematically favored its own services—such as Google Shopping and Google Flights—within its search results. Penalties for DMA violations can reach up to 10% of a company’s worldwide annual revenue.
Operational Strengths Provide Counterbalance
Despite the regulatory pressure, Alphabet’s underlying business continues to show strategic strength. The company is set to realize a notable book gain from its stake in SpaceX, following a new funding round that values Elon Musk’s aerospace company at approximately $800 billion.
Should investors sell immediately? Or is it worth buying Alphabet?
Furthermore, Alphabet is actively securing its technological future. A recently announced partnership with NextEra Energy aims to ensure a stable power supply for its expanding AI infrastructure. In a move to capture a share of the extended reality (XR) market, Google has also confirmed plans to launch new AI-powered smart glasses in collaboration with Samsung in 2026.
Market Performance and Valuation Context
The regulatory news has introduced volatility, with Alphabet shares declining about 2% over the past week to close at €263.25 on Friday. Nevertheless, the broader trend remains powerfully positive: the stock has advanced more than 42% since the start of the year. With a market capitalization hovering around $3.7 trillion, Alphabet remains one of the top performers among major technology equities.
Analyst Sentiment Stays Largely Positive
Wall Street analysts have so far been relatively unfazed by the developments in Brussels. The consensus rating on the stock remains a “Moderate Buy,” with the average price target suggesting there is still room for growth. Many market experts view the robust expansion in Alphabet’s cloud computing division and the high adoption rate of its Gemini AI model as more critical long-term success indicators than the potential for regulatory fines.
The coming months will be pivotal for the near-term investment thesis. While investors will scrutinize the quarterly earnings report due in late January 2026, the actual financial impact will only become clear after the EU reaches a definitive decision, expected in the spring. Until then, market participants should anticipate that political and regulatory news from Europe may continue to cause intermittent pressure on the share price.
Ad
Alphabet Stock: Buy or Sell?! New Alphabet Analysis from December 15 delivers the answer:
The latest Alphabet figures speak for themselves: Urgent action needed for Alphabet investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from December 15.
Alphabet: Buy or sell? Read more here...
