Alphabet Share Price Drops 7%, Loses $150 Billion as Apple Eyes AI Search Shift.

Alphabet Inc., the parent of Google, saw its stock tumble by more than 7% on Wednesday, erasing around $150 billion in market value. The sharp drop came after reports revealed that Apple is considering integrating artificial intelligence-powered search options into its Safari browser — a move that could fundamentally shift the balance in the search engine market and hit Google where it hurts most: its dominance on Apple devices.

What Triggered the Stock Drop?

The sell-off was sparked by revelations during an ongoing antitrust trial. Apple’s senior vice president of services, Eddy Cue, testified that the company is “actively looking at” reshaping its Safari browser with new AI-powered search options. Cue’s statement specifically pointed out a trend where users are increasingly turning to AI tools for finding information, leading to the first recorded decline in Safari-based searches last month.

Alphabet shares responded swiftly, closing the day 7.51% lower at $152.80. This decline wiped out roughly $150 billion from Alphabet’s market capitalization — one of its steepest single-day losses in recent history.

Why This Matters for Google

The timing and implications of Cue’s statement couldn’t be more critical for Google. For years, Google has paid Apple billions annually — reportedly around $20 billion in 2022 alone — to remain the default search engine on Safari. This arrangement contributes significantly to Google’s ad revenues, with about 36% of its search ad revenue estimated to come from Safari users.

If Apple decides to offer or promote AI-powered alternatives from providers like Perplexity, OpenAI, or Anthropic, Google’s dominance in mobile search, especially on iPhones, could be at risk.

In a market that’s becoming more AI-first by the day, this shift in search behavior represents not just competition, but a foundational challenge to Google’s core business.

Google Responds, but Questions Remain

In response to the headlines and investor concerns, Google maintained that its search ecosystem remains strong. “People are seeing that Google Search is more useful for more of their queries — and they’re accessing it for new things and in new ways,” the company stated, highlighting its voice and visual search innovations as evidence of ongoing growth.

However, there’s a critical catch — it remains unclear whether Eddy Cue’s comments about declining Safari searches were based on comparable metrics or an internal trend that could be interpreted in multiple ways. The ambiguity has only fueled further speculation. Source: The Mint

Apple’s Strategy: Keep Options Open

Cue’s testimony also emphasized Apple’s intent to keep its options open. The company is exploring partnerships with various AI players, suggesting it’s not tied to any one solution and may be positioning itself to shift search behavior across its platforms based on performance, innovation, and possibly regulatory developments.

Importantly, Apple has not announced any formal partnerships or immediately changed Safari’s default search setup. But the mere suggestion that Google’s place as the default could be challenged was enough to send Alphabet’s stock into a tailspin.

Alphabet’s Performance: A Mixed Picture

Wednesday’s decline was dramatic, but it’s not the whole story. Here’s a breakdown of Alphabet’s stock performance:

• Past 1 Day: Down 7.51%
• Past 1 Month: Up 2.4%
• Past 6 Months: Down 16%
• Year-to-Date (YTD): Down 20%
• 1-Year Performance: Down 12%
• 5-Year Performance: Up 120%

While long-term returns remain strong, the recent downward trend highlights growing investor anxiety, particularly as AI reshapes the competitive dynamics in tech.

Regulatory Shadows Looming

The timing of this news also overlaps with the broader legal scrutiny Google faces. The U.S. Department of Justice has proposed several remedies in ongoing antitrust lawsuits, including banning payments made by Google to secure default status in browsers like Safari.

If enacted, such a ban could strike at the heart of Google’s iOS search strategy, potentially unraveling one of the most lucrative deals in digital advertising history.

With the regulatory environment heating up, Apple’s decision to explore alternatives could be as much about reducing its own antitrust exposure as it is about enhancing user experience with AI tools.

What Comes Next?

This episode highlights the growing tension between big tech players as they race to define the future of search in the age of AI. Apple’s quiet but strategic push into AI search suggests a world where Google no longer dominates by default — especially on devices it doesn’t control.

Meanwhile, Google must not only compete technologically but also navigate a shifting regulatory and business landscape where its default status is no longer guaranteed. 

Source: The Mint

• Final Word

Alphabet’s $150 billion wipeout is a reminder of just how sensitive the market has become to AI developments — especially when they involve heavyweight players like Apple. As AI reshapes how people access and consume information, the old search engine model is being challenged from multiple angles. And for investors and industry watchers alike, all eyes are now on what Apple does next.

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