Shares of Alphabet (GOOGL), the parent company of Google, are down over 8% at the time of writing after Apple’s (AAPL) senior vice president of services, Eddy Cue, said that the iPhone maker is looking into adding AI search engines like Perplexity to its Safari browser. According to Bloomberg, Cue shared this during Alphabet’s antitrust trial, where it was revealed that Google pays Apple $20 billion each year in order to make its search engine the default in Safari. This deal is a key part of the case, as regulators accuse Google of using such agreements to maintain an illegal monopoly in the search market.
Cue noted that Safari recently saw its first-ever drop in search activity, which he believes happened because users are shifting toward AI-based search tools. Apple already offers ChatGPT as a search option through its Apple Intelligence platform. Cue clarified that Apple won’t remove Google as the default right now since it makes so much money from the deal. However, he believes that AI search apps will eventually replace traditional search engines.
Nevertheless, Google has been racing to improve its AI capabilities. Indeed, it introduced AI Overviews in Google Search and is testing a new AI Mode that works more like apps such as ChatGPT. Google also offers Gemini AI search, although it is separate from its main search engine. Other companies, like Microsoft (MSFT), are also competing with AI options like Copilot Search. Despite this competition, Google’s deals with Apple and others like Samsung help keep its search engine widely used. For Apple, the $20 billion from Google is important as well, as it makes up more than 20% of its Services business.
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 31.3% upside potential from current levels.
