Alphabet Stock Falls Amid AI Competition: Analysts Predict 31.21% Upside

Alphabet's stock dropped 8% amid AI search competition, led by Apple's testimony on Safari usage decline. Analysts predict a 31.21% upside potential with an average one-year price target of $200.42. The consensus rating is "Outperform" with a GF Value of $195.79, anticipating a 28.18% upside from the current price of $152.75.

Alphabet Inc.'s stock experienced a significant drop of 8% on Wednesday, May 7, 2025, following a bold statement by Apple's Senior Vice President of Internet Software and Services, Eddy Cue. Cue's testimony during a federal court hearing revealed that Apple is actively exploring partnerships with AI-driven search providers, potentially ending the long-standing partnership between Apple and Google [1].

The decline in Alphabet's stock, which closed at $151.38, was also reflected in the broader market, with the Nasdaq 100 turning negative during the session. Apple's stock price dropped by over 2% intraday [1]. The market's reaction underscores the potential impact of this shift on Alphabet's advertising business, which is heavily reliant on default search traffic [2].

Cue's remarks highlighted a growing preference for AI assistants over traditional search queries, citing a decline in search volume on the Safari browser for the first time in April [1]. Apple is considering incorporating AI search providers such as OpenAI, Perplexity, and Anthropic into the Safari browser, potentially replacing Google as the default search engine [1].

Analysts have responded to this development with cautious optimism. While the current price target for Alphabet's stock is $200.42, with a consensus rating of "Outperform" and a GF Value of $195.79, there is a potential upside of up to 31.21% from the current price of $152.75 [3].

This shift in the search engine landscape is a significant challenge for Alphabet, but it also presents an opportunity for new players in the AI search market. Apple's exploration of AI search providers and its plans to incorporate them into the Safari browser could mark a new era in web search, potentially disrupting Google's dominance [1].

References:

[1] https://longportapp.com/en/news/239196393
[2] https://themusicessentials.com/news/alphabet-stock-tanks-as-apple-exec-says-ai-could-replace-google-search/
[3] https://www.gurufocus.com/news/2849840/taskus-task-to-go-private-in-1650-per-share-deal?mod=mw_quote_news&r=4bf001661e6fdd88d0cd7a5659ff9748