Why Alphabet Stock May Drop Soon

Alphabet (GOOGL) has stumbled before. Its stock plunged more than 30% within a span of less than 2 months in 2022, wiping out billions in market value and erasing massive gains in a single correction. If history is any guide, GOOGL stock isn’t immune to sudden, sharp declines.

Specifically, we see these risks:

1. Antitrust Remedies: The Ad Tech Breakup
2. Search Monopoly Erosion: Death by a Thousand Cuts
3. YouTube’s Decaying Engagement Dominance

Risk 1: Antitrust Remedies: The Ad Tech Breakup

• Details: Forced divestiture of Google Ad Manager, representing an estimated 12% of Alphabet’s revenue, and multiple compression due to loss of integrated ad stack synergies.
• Segment Affected: Google Advertising
• Potential Timeline: Immediate; Q1-Q2 2026
• Evidence: DOJ seeking structural remedies, including divestiture, in the ongoing Ad Tech antitrust case; remedies phase concluded in October 2025; Judge Leonie Brinkema found Google monopolized ad tech markets (April 2025).

Risk 2: Search Monopoly Erosion: Death by a Thousand Cuts

• Details: Projected decline in search advertising market share from 51% to 48% by year-end 2025., Forced sharing of search data with competitors, eroding long-term competitive advantages.
• Segment Affected: Google Search, Android, Chrome
• Potential Timeline: Next 2-3 Quarters
• Evidence: Court-ordered remedies in the DOJ search monopoly case prohibit exclusive distribution agreements for Google Search, Chrome, and Gemini (September 2025)., Competitors like OpenAI and Perplexity are actively seeking to leverage these remedies to gain market share.

Risk 3: YouTube’s Decaying Engagement Dominance

• Details: Ceding ground in the creator economy to platforms with higher engagement rates. Potential for declining ad revenue growth as advertiser sentiment shifts to platforms with more effective short-form video monetization.
• Segment Affected: YouTube
• Potential Timeline: Q1-Q3 2026
• Evidence: TikTok’s average engagement rate of 2.50% is five times higher than Instagram’s (0.50%), with YouTube not even ranking in the top tier (July 2025)., Despite a larger user base, YouTube’s total time spent is being challenged by TikTok, indicating a shift in user attention.

What Is The Worst That Could Happen?

Looking at GOOGL’s risk, it’s clear downturns hit hard despite strong fundamentals. During the Global Financial Crisis, it plunged about 65%. The inflation shock saw a 44% drop, while Covid and the 2018 correction caused dips around 30% and 23%, respectively. Volatility remains a real factor.

Is Risk Showing Up in Financials Yet?

• Revenue Growth: 13.4% LTM and 11.0% last 3-year average.
• Cash Generation: Nearly 19.1% free cash flow margin and 32.2% operating margin LTM.
• Valuation: Alphabet stock trades at a P/E multiple of 33.4

*LTM: Last Twelve Months

If you want more details, read Buy or Sell GOOGL Stock.

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