Alphabet shares have been rallying steadily for five years, an upward march that may face little resistance in the U.S. But Europe is another story.
Wall Street is more bullish on Google's parent than any other major technology company, with 92 percent of analysts recommending investors buy the stock, according to FactSet. Even with revenue last year nearing $75 billion, growth in 2016 is expected to accelerate.
The most vocal skeptic of late is Guggenheim Securities' Jake Fuller, one of four analysts who advise holding the stock. Fuller initiated coverage of Alphabet in March with a neutral rating, citing "under-appreciated regulatory risk" tied to the European Commission's year-long probe of anti-competitive practices on Android devices, as well as a separate investigation into how Google's search engine handles shopping queries.
Fuller has since published two more reports on the same theme, including an earnings preview on Tuesday titled, "Will the EC steal the show?"
"EC challenges underpin our neutral stance on GOOGL, with a view that as pressure escalates it could prove to be a multiple headwind given how little attention the Street has paid to date," he wrote.
The European Commission said Wednesday that it's informed Google of its belief that the company has breached antitrust rules by forcing phone manufacturers to pre-install and feature certain Google services, and preventing them from using Android code to sell competing devices.
Alphabet is scheduled to report first-quarter results after the close of trading on Thursday, and regulatory concerns are clearly not top of mind for investors. Though the stock is flat to start 2016, it's up 43 percent over the past 12 months, trailing only Amazon.com among the biggest U.S. tech companies. The stock was up slightly Wednesday afternoon to $778.64 for its class A stock. The all-time intraday high is $810.35, and its closing record is $793.96.
Google rally
Analysts on average expect first-quarter revenue expansion of 18 percent to $20.4 billion, according to Thomson Reuters, following growth of 12 percent in the period a year earlier. Earnings per share likely increased to $6.31 from $5.20.
The average price target among analysts is $927.24, according to FactSet, representing a 20 percent increase from Tuesday's close. Five analysts have targets of at least $1,000. Mark Mahaney of RBC Capital Markets is one of them.
Mahaney sees increased spending on mobile ads and YouTube complementing Google's dominant position in desktop search. Google controls about one-third of the global digital ad market, according to eMarketer, and in 2015 was more than triple the size of the number two player Facebook.
"At the margin, its market share has continued to increase, with its very strong position in mobile and its ongoing innovation likely to continue to expand that share incrementally for the foreseeable future," wrote Mahaney, whose price target is right at $1,000, in his earnings preview this week.
Alphabet is also at the early stages of a $5.1 billion stock repurchase program and has $73 billion in cash and equivalents to make any acquisitions that may be necessary.
While Mahaney doesn't worry about a negative European ruling and its potential drag on the stock, he does list "regulatory concerns" as the primary risk to his price target.
Fuller expresses significantly more caution. With over half of Alphabet's revenue generated outside the U.S. and Europe as a major contributor, the EC has the potential to be quite disruptive.
In the risk sections of its annual report, Alphabet said that European legislators and regulators could fine the company or force it to change its practices in ways that "could negatively impact our business and results of operations in material ways."
Read More Will Europe destroy Google?
So what exactly is the EC's beef?
Dating back to 2010, the commission has been formally questioning Google about potential antitrust violations. According to the EC, Google's search market share in most European countries tops 90 percent and the company has used its position to suppress competitors.
A year ago, the EC sent a statement of objections to Google, complaining that the company favors its own services when consumers are using the search engine for comparison shopping. At the same time, the government said it's opened an investigation into Android, the operating system developed by Google and used by large manufacturers like Samsung and HTC.
The commission has been looking into whether Google has unlawfully incentivized handset sellers to pre-install Google apps and if the company inhibited the efforts of some manufacturers to modify Android for the devices they distribute.
Google, of course, responded by vigorously defending its practices and denying that they are in any way anti-competitive.
The nonprofit Information Technology and Innovation Foundation voiced its support for Google on Wednesday following the EC announcement, arguing that the company's actions are not hurting consumers.
"Operating systems like Android benefit from economies of scale and network effects that naturally limit the number of competitors in the market," the Washington-based group said. "This often produces greater value for consumers in the form of better features, lower costs, and increased interoperability.
Fuller's message to investors is three-fold. First, the regulatory climate in Europe has hardened and Google could face a significant fine as well as be forced change in its practices. Second, other countries could look at Europe and decide to follow suit. Finally, if successful in shopping, the European Union could go after additional search verticals like local and travel.
The reason none of this is getting in the way of Google's stock rally, Fuller said, is that investors expect Google "will simply pay a fine and be done, challenges will take years to play out in court, and a material operational change is unlikely."
Instead of regulatory issues, expect much of the discussion on Thursday's earnings call to be around Alphabet's "other bets," the nonadvertising related businesses that get broken out in the company's earnings report. They include autonomous cars, the Calico health business, and Nest thermometers.
Mahaney expects revenue growth among other bets to jump 38 percent to $110 million, accounting for one-half of 1 percent of sales. Meanwhile, the operating loss will widen to $664 million from $516 million, leaving Alphabet with adjusted operating income of $6.7 billion.
With that kind of profit, investors are looking past the regulatory overhang.
This story was updated to reflect Wednesday's statement from the EC regarding its letter to Google.