Alphabet Shares Drop Over 7% as Apple Eyes AI-Powered Search Technology

Alphabet Inc. (NASDAQ: GOOGL) saw its stock tumble by more than 7% amid growing speculation that Apple Inc. (NASDAQ: AAPL) is preparing to launch its own AI-driven search engine. This potential shift could pose a serious challenge to Google’s long-standing dominance in the search market and impact Alphabet’s core advertising revenue.

Apple Considers AI Search Integration Amid Browser Traffic Decline

Investor sentiment turned negative after Eddy Cue, Apple’s Senior Vice President of Services, disclosed that Safari browser searches declined for the first time in April. Cue noted that the company is actively evaluating the integration of artificial intelligence into its search functionality, hinting at a broader strategy to enhance user experience—and potentially decrease Apple’s dependency on Google Search.

Apple’s AI Ambitions Could Threaten Google’s Revenue Stream

Cue's statements, originally reported by Bloomberg, were made during a high-profile antitrust trial examining Google’s search engine practices. As part of the proceedings, Apple’s interest in alternative AI search platforms such as Perplexity and Anthropic was revealed—highlighting a possible pivot away from Google as its default search provider.

Given that search advertising accounts for a major portion of Alphabet’s revenue, any disruption to its agreement with Apple—or a decline in search traffic routed through iOS devices—raises red flags for investors. The stock market reacted quickly, with Alphabet’s share price suffering its steepest one-day drop in recent months.

Market Outlook: Is Google Losing Its Grip on Search?

While Apple has not formally announced a proprietary AI search engine, the mere possibility has triggered anxiety in the markets. Analysts warn that Alphabet’s competitive moat in search could shrink if Apple decides to go independent or partner with emerging AI search platforms.

For now, Alphabet faces growing pressure to defend its search engine market share against evolving technologies and changing strategic alliances among big tech players.

(Sources: investing.com)