Google’s parent company, Alphabet Inc., lost $120 billion in market value over the week due to fears that artificial intelligence could weaken Google’s position in the search industry, which is its main source of revenue. Bloomberg writes about it.
The reason for the stock’s decline
During the trial, Apple’s top manager, Eddy Cue, said the company plans to integrate AI services into the Safari browser. Google pays Apple about $20 billion annually to remain the default search engine on iPhones, but in April, the number of queries in Safari decreased for the first time. Users are likely to switch to alternatives such as OpenAI and Anthropic. Alphabet shares fell 7.3% on Wednesday and almost 6% for the week.
Situation assessment
Despite Alphabet’s claims that the total number of search queries is growing, investors are concerned. “This is the first real competitor for Google in the search industry. We’re already seeing the first cracks in the armor,” said Art Hogan of B. Riley Wealth Management. Analysts fear that losing the search monopoly threatens the company’s profits.
Analysts’ forecasts
More than 80% of Bloomberg experts recommend buying Alphabet shares, predicting their growth by 30%. However, some analysts believe that the expected profit of $115 billion for 2025 may be overestimated due to competition from AI.