Alphabet Shares Drop Over 8% Amid AI Search Disruption Concerns

Alphabet's shares fell by over 8% after Apple executive Eddy Cue testified during a federal antitrust trial that Apple is considering integrating AI-powered search engines, like those from OpenAI and Perplexity, into its Safari browser. Cue revealed that searches in Safari declined for the first time, attributing the drop to users shifting toward AI tools, casting doubt on Google's position as the default search provider for Apple devices—a deal reportedly worth up to $20 billion annually for Google. The prospect of losing this status and the associated advertising revenue triggered a sharp selloff in Alphabet's stock, reflecting investor concerns about Google's future dominance in search. Cue indicated Apple is not planning to build its own search engine but is preparing for a future where traditional web search may play a reduced role, amid growing competition from AI startups. Analysts noted that any disruption to the Google-Apple partnership could significantly reshape the search landscape due to Apple's vast user base. Despite the stock setback, analysts maintain a generally positive long-term outlook for Alphabet, projecting potential upside if it adapts to the evolving market.