• A U.S. federal court ruled that Google will not be forced to divest its Android OS or Chrome browser, removing a major overhang on the stock.
  • The decision, while requiring Google to share more data with competitors, is seen as a significant victory that alleviates fears of a government-mandated breakup.
  • Alphabet shares surged over 8% to a record intraday high, with positive spillover effects boosting sentiment across the big tech sector.

Alphabet Inc. shares soared to a record intraday high on Thursday, jumping 8.2% after a U.S. federal court delivered a largely favorable ruling in a long-running antitrust case, decisively removing the specter of a forced breakup of its core businesses.

The ruling, issued by a federal judge, stated that Google will not be required to divest its Android operating system or its Chrome browser. This outcome, which had been a primary concern for investors since the lawsuit was filed, effectively eliminates the most drastic potential remedy that regulators had sought. The court did, however, order Google to share more data with competitors to foster greater competition in the search market, a requirement that people familiar with the matter say Alphabet intends to appeal.

For years, the case had cast a shadow over Alphabet's sprawling digital empire, creating uncertainty about the structural integrity of its most profitable assets. The immediate market reaction was one of palpable relief, with the stock's sharp gains adding tens of billions of dollars to the company's market capitalization. The ruling also provided a tailwind for other tech giants, with Apple Inc. shares also advancing after the court declined to require it to stop taking payments from Google for product preloading on its devices.

“The market is breathing a sigh of relief that the worst-case scenario is off the table,” said one analyst who asked not to be named because the firm has not yet published a formal note. “While the data-sharing mandate is a new operational consideration, it’s a far cry from the existential threat of a breakup.”

The verdict underscores the judiciary's historical reluctance to mandate the breakup of dominant technology platforms, a precedent set decades ago in the U.S. government's antitrust case against Microsoft Corp. The ruling is perceived as a setback for regulatory efforts aimed at restructuring the biggest tech firms, even after findings of monopoly power. A person close to the matter indicated that Alphabet's legal team views the data-sharing order as onerous and is preparing a challenge, setting the stage for further legal wrangling.

Alphabet did not immediately respond to a request for comment on the ruling or its appeal plans.

The legal clarity arrives as Alphabet is already demonstrating formidable financial strength. The company recently posted second-quarter earnings that handily beat analyst expectations, with revenue climbing 14% year-over-year to $96.4 billion and Google Cloud revenue surging 32%. With the major regulatory overhang now diminished, analysts are likely to further raise price targets, with some already projecting the stock could reach as high as $260.

*This article was updated to correct the percentage gain in the headline; shares were last up 8.2%.