Shares of tech giant Alphabet (GOOGL) are trading higher after yesterday’s 7% drop, which was due to reports that Apple might add AI search engines to its Safari browser. Currently, Google pays Apple (AAPL) $20 billion a year to be the default search engine in Safari. However, Apple’s senior vice president of services, Eddy Cue, recently said during a U.S. antitrust trial that Safari searches dropped for the first time last month, as users increasingly turned to AI-based search options. He also said that Apple is thinking about adding AI search engines like Perplexity to Safari.
Nevertheless, Google responded by saying that overall search queries are still growing, including on Apple devices. In addition, analysts from firms like Jefferies, TD Cowen, Citi, and JPMorgan defended Alphabet stock and maintained their Buy ratings. Indeed, Jefferies and JPMorgan argued that Cue’s comments may have been aimed at showing regulators that the search market has plenty of competition, which would help Google keep its deal with Apple. They noted that Apple has good reasons to make Google appear less dominant while also emphasizing that Google still offers Apple the best financial deal.
Separately, TD Cowen’s five-star analyst, John Blackledge, pointed out that Google’s AI Overviews feature, which adds AI summaries to search results, now has 1.5 billion monthly users across 140 countries and generates similar revenue as traditional searches. This helps ease concerns that AI search will hurt Google’s ad business. Still, competition is heating up, with Microsoft (MSFT) offering AI-powered Copilot search and Apple adding ChatGPT through its Apple Intelligence platform.
Is Google Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on GOOGL stock based on 28 Buys and eight Holds assigned in the past three months. Furthermore, the average GOOGL price target of $198.79 per share implies 29.5% upside potential from current levels.
