Apple (AAPL) doesn’t want to be left behind in the artificial intelligence (AI) revolution, and that might mean it needs to ditch Google Search. Engineer Eddy Cue said as much during testimony in the Google breakup lawsuit. He highlighted the changing search landscape and said Apple may shift from relying on Google search to AI-powered search results.
If Apple does switch to AI search results, it would mark the end of its roughly $20 billion a year agreement with Alphabet (GOOGL) to make Google the default search engine on Safari. This has accounted for approximately 5% of Apple’s annual revenue over the last few years.
Losing out on an annual $20 billion revenue stream might not sit well with AAPL shareholders. However, the alternative is being left behind in the search marketplace. Cue acknowledged that Google is still the best search option right now, but that might not be the case in just a few years.
What Does Apple’s AI Shift Mean for Google?
With Apple considering an alternative to Google search, some may view this as a negative for the Alphabet subsidiary. On the other hand, Google is already in the AI race with its Gemini tool. AI also thrives on data, and Google has plenty of that to offer with its nearly 90% market share for search.
Granted, that massive market share is what landed Google in hot water with the Department of Justice (DOJ). This triggered two antitrust cases against Google, one focused on its search dominance and the other on its advertising division.
The DOJ has suggested that Google has too much control over search and advertising. This has fueled calls to break up the company, which could result in separate companies operating Google Search, advertising, and Android.
AAPL vs. GOOGL: Which Stock Is the Better Buy?
Turning to Wall Street, Alphabet appears to be the better investment with its consensus Strong Buy rating and average price target of $198.79, representing a potential 31.32% upside. Even so, Apple is no slouch with a consensus Moderate Buy rating and average price target of $228.65, representing a possible 16.51% upside.
