Alphabet’s Dual Front: Legal Challenges Meet Unabated Growth

While navigating significant antitrust proceedings, Alphabet Inc., the parent company of Google, continues to demonstrate formidable operational strength, particularly within its cloud and artificial intelligence divisions. The company's market valuation stands at approximately $4 trillion, even as it contests a major legal ruling.

The most compelling narrative for investors currently stems from Alphabet's cloud business, which is solidifying its role as a primary profit engine. In the third quarter of 2025 alone, this segment generated an operating profit of $3.59 billion, achieving a margin of 23.7%. A staggering metric is the division's backlog of committed business, which soared by 82% year-over-year to reach $155 billion.

Market researchers project that the cloud unit could deliver a net profit of $20 billion in 2026. This bullish outlook is fueled by intense corporate demand for AI infrastructure, where Google competes effectively by leveraging a combination of Nvidia's semiconductor technology and its proprietary Tensor Processing Units (TPUs).

Legal Appeal Filed in Monopoly Case

On a separate front, the technology giant is mounting a legal defense. On January 16, the company formally filed an appeal against a court verdict that found Google maintained an illegal monopoly in internet search. This legal maneuver is expected to potentially delay the enforcement of strict remedial measures.

Those measures, scheduled for December 2025, include requirements to provide search data for competitors' AI training and a prohibition on multi-year exclusive contracts. Investors did receive one piece of favorable news: a forced divestiture of the Chrome browser is no longer under consideration. Google's position is that the imposed remedies would stifle innovation and compromise user privacy.

Should investors sell immediately? Or is it worth buying Alphabet?

AI Leadership Acknowledges Fierce Competition

Demis Hassabis, CEO of Google's DeepMind AI unit, has characterized the present landscape as the "most intense competition" in the history of technology. To maintain its leadership stance, Hassabis now engages in daily direct coordination with Alphabet CEO Sundar Pichai.

He also issued a cautionary note, indicating that Chinese AI models have dramatically narrowed the gap with U.S. developments, lagging by perhaps only a few months technologically. However, Hassabis observed that Chinese firms have not yet demonstrated a capacity for genuine, groundbreaking innovation beyond established benchmarks. The company's own Gemini 3 model, launched in November 2025, has been met with positive market reception.

Analyst Confidence and Insider Activity

Despite regulatory headwinds, optimism persists on Wall Street. Firms including Wolfe Research and Cantor Fitzgerald have recently raised their price targets, with some reaching as high as $380 per share. This confidence is fundamentally supported by Alphabet's robust Q3 2025 results, which exceeded expectations for both revenue and profit.

Contrasting this external optimism, corporate insiders have been capitalizing on elevated share prices. Over the preceding 90 days, they disposed of stock valued at nearly $58 million.

All eyes are now on February 4, 2026, when Alphabet will disclose full-year financial results. This report will be scrutinized for evidence that the operational momentum in cloud computing and AI is sufficient to continue overshadowing persistent regulatory uncertainties.