Alphabet stocks slide as Apple seeks AI alternatives to Google seek

Alphabet Shares Slide as Apple Seeks AI Alternatives to Google Search

May 7, 2025 — Alphabet Inc., the parent organization of Google, noticed its shares dip sharply on Tuesday following reports that Apple Inc. Is exploring alternatives to Google Search, especially those powered via synthetic intelligence (AI). The capacity shift, which would mark a significant exchange in the lengthy-status courting among two of tech's biggest players, has sparked concerns among investors approximately Google's dominance in the seek market.

Apple has reportedly held talks with some of AI startups and massive tech firms in current months, comparing subsequent-generation seek equipment that might sooner or later update Google because the default seek engine on its Safari browser. Among the businesses believed to be in discussions with Apple are OpenAI, which backs ChatGPT, and Perplexity AI, a rising participant in the AI-powered search area.

The news, first said through enterprise insiders familiar with the matter, despatched Alphabet’s Class A shares down almost four% with the aid of noon Tuesday, erasing billions from its marketplace capitalization. The circulate highlights how sensitive Google’s center commercial enterprise is to modifications in its seek partnership with Apple—a courting predicted to be worth over $18 billion yearly.

Google has long paid Apple a hefty sum to stay the default search engine on iPhones and other Apple devices, a deal that has drawn regulatory scrutiny through the years. But the growing energy of AI-pushed seek systems appears to be reshaping Apple’s considering how customers engage with records.

“Apple’s interest in AI-local search reports represents a capacity turning factor inside the seek ecosystem,” stated Mark Hibben, a generation analyst with R&D Market Strategy. “It’s no longer pretty much replacing Google—it’s about rethinking how search ought to work in an AI-first global.”

The shift comes amid a broader surge in AI development, led via generative AI tools able to handing over conversational, context-rich answers in place of traditional lists of links. ChatGPT, Microsoft’s Copilot, and Perplexity AI have all gained traction by means of supplying customers extra intuitive and personalized search reports.

Apple, which has traditionally moved carefully in adopting third-party technologies, is also reportedly growing its own AI tasks beneath the umbrella of “Apple Intelligence,” a brand new suite of features predicted to be unveiled on the employer’s Worldwide Developers Conference (WWDC) in June. These could include AI-powered improvements to Siri, Spotlight, and different machine-stage functions—in addition reducing reliance on Google.

Alphabet has replied to the aggressive threat by means of accelerating the rollout of its very own AI gear. Google’s Gemini chatbot and its AI-powered Search Generative Experience (SGE) are part of its effort to adapt beyond key-word-based totally seek. However, analysts warn that even minor losses in market percentage, particularly on Apple devices, ought to have a first-rate impact on Google's advertising sales, which nevertheless money owed for the lion’s percentage of Alphabet's income.

“Google Search is Alphabet’s crown jewel, and the concept that Apple ought to flow far from it—even partly—sends a clean message to investors,” said Laura Chen, senior fairness strategist at Morgan Capital. “It indicators real threat to destiny sales increase if Google can’t hold its role on iOS.”

As the AI search race intensifies, Apple’s subsequent flow might be closely watched. A choice to accomplice with an alternative search provider—or to release its own AI-driven seek device—could mark a sizeable shift in the balance of strength in the tech enterprise.

For now, Alphabet need to grapple with the uncertainty. While Google remains the dominant player in worldwide search, the upward thrust of AI competition and Apple’s experimentation with options pose a credible danger that might reshape how billions of customers seek the net.