As if large-cap tech stocks weren’t already facing troubles, the Department of Justice has filed a new antitrust lawsuit against Google. The government is accusing the tech giant of hurting competition with its dominance in the online ad market and calling for Google to divest its ad tech business, which stems from the company’s 2008 acquisition of DoubleClick.
While the suit will take years to play out, a report from Barron’s noted that the case is making analysts nervous over how it will impact the stock of Google’s parent company Alphabet.
“The risk is less to the E than to the P/E,” wrote Evercore ISI analyst Mark Mahaney. “But it’s real, and is not going away anytime soon.”
And although MKM Partners analyst Rohit Kulkarni doesn’t see any medium-term issues from the company’s regulatory issues, he wrote that “headline risks could keep Alphabet shares range-bound in 2023.”
Meanwhile, New Street Research policy analyst Blair Levin noted that the accumulation of cases could eventually impact Google and other online businesses.
“While we are skeptical of the likelihood of success in terms of the new litigation,” Levin wrote, “Investors will have to pay attention to how it interplays with antitrust activity abroad. Even as the process in the United States winds its way through the legal system, enforcers in Brussels and London — among other jurisdictions — will likely pursue antitrust cases against Big Tech companies, including Alphabet, as well as regulatory regimes that will have similar ramifications.”
The case against Google is one of many examples signaling that investors can’t simply rely on an index fund full of FAANG stocks to achieve income or strong returns. In such a market environment, active management can be a big help.
While passive strategies lack the flexibility to adapt to changing market environments, active ETFs can offer the potential to outperform benchmarks and indexes. Plus, active managers with greater resources and greater scope benefit from economies of scale, which can often translate to better returns.
“Active managers have the flexibility to take advantage of market volatility and add to favored positions when prices become more attractive,” said Todd Rosenbluth, head of research at VettaFi.
As part of its lineup of active exchange traded funds, T. Rowe Price offers a suite of actively managed equity ETFs, including the T. Rowe Price Blue Chip Growth ETF (TCHP), the T. Rowe Price Dividend Growth ETF (TDVG), the T. Rowe Price Equity Income ETF (TEQI), the T. Rowe Price Growth Stock ETF (TGRW), and the T. Rowe Price U.S. Equity Research ETF (TSPA).
T. Rowe Price has been in the investing business for over 80 years through conducting field research firsthand with companies, utilizing risk management, and employing a bevy of experienced portfolio managers carrying an average of 22 years of experience.
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