As Alphabet’s (GOOG, GOOGL) antitrust woes continue, Evercore ISI managing director and head of internet research Mark Mahaney joins Seana Smith and Madison Mills on Catalysts to discuss risks to the Google parent company, including the antitrust case and artificial intelligence (AI) competition.

“There's a lot of uncertainty over Google,” Mahaney says, adding that investors buying the stock “have to be pretty long duration about it.” The analyst, who maintains an Outperform rating on Alphabet, tells Yahoo Finance “Amazon works better near term than Google does. Google's not one of my top three picks now, and it's sort of these two pincers on the stock. There's this concern about AI-driven competition, that's ChatGPT, and then there's concern about this [Department of Justice] regulation trials.” Alphabet was found to hold a monopoly in search and is defending its ad business in a separate trial.

Mahaney says the search case will likely be tied up in the court system for a long period, given expected appeals, with Google, he thinks, ultimately reaching a settlement or being ordered to stop paying traffic acquisition costs (TAC) to be the default search provider. Investors “probably have a lot of protection in terms of your earnings estimates for the next couple of years, but you could well see a hit to your revenue estimates in the next couple of years," he says.

"I don't know if anybody has any huge visibility into this, but we'll get more as we go through the search trial, and the hearings over the remedies will get more of that in the next three to six months." The analyst clarifies he sees the regulatory challenges as a bigger risk to Google than the AI competition concerns.

Despite legal risks, Mahaney says there’s “an interesting long opportunity for Google. That's why we're sticking with it. We think [the] current valuation is also highly reasonable.”

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This post was written by Naomi Buchanan.