Alphabet Inc. (GOOGL) experienced a significant decline of over 7% on May 7, 2025, following reports that Apple is exploring the integration of AI-powered search functionalities into its Safari browser. This development has raised concerns about potential disruptions to Google's dominance in the search market. 

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Can Apple Erode Google's Search Market Share?

Apple's consideration of AI-driven search alternatives, such as those from OpenAI and Perplexity AI, indicates a strategic move to enhance user experience and reduce reliance on Google's search engine. Given that Google reportedly pays Apple approximately $20 billion annually to remain the default search engine on Safari, any shift in this arrangement could have substantial implications for Google's search advertising revenue .

While Apple's initiatives could introduce competition, Google's entrenched position, bolstered by its extensive data infrastructure and continuous AI advancements, may mitigate immediate threats. However, the evolving landscape necessitates close monitoring of user adoption trends and further developments in AI search technologies. 

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Assessing Alphabet's Recent Stock Decline

The recent drop in Alphabet's stock price to approximately $150.25 represents a significant market reaction to potential shifts in the search engine landscape. Technical analyses suggest that key support levels to watch are around $141 and $131, corresponding to previous lows and the 200-day moving average .

Despite these concerns, some analysts maintain a positive outlook on Alphabet's long-term prospects. For instance, Morningstar has assigned a fair value estimate of $237 per share, citing Alphabet's diversified business model and strong positions in areas like cloud computing and YouTube .

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Investment Considerations

Alphabet (GOOGL): The current stock price may present a buying opportunity for investors with a long-term perspective, especially considering the company's diversified revenue streams and ongoing investments in AI and cloud services. However, potential investors should remain cognizant of the risks associated with shifts in search engine preferences and increased competition. 

Apple (AAPL): Apple's exploration into AI search functionalities underscores its commitment to innovation and enhancing user experience. While the impact on its stock has been minimal, the company's vast ecosystem and loyal user base position it well to capitalize on advancements in AI technologies. 

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Target Price Estimates

Alphabet (GOOGL): Analyst estimates vary, with some suggesting a fair value in the range of $130–$140 if significant portions of the search business are compromised. Conversely, optimistic projections, such as Morningstar's $237 estimate, reflect confidence in Alphabet's broader business operations .

Apple (AAPL): While specific target prices are not detailed in the provided information, Apple's consistent innovation and strong financial performance continue to make it a favorable option for long-term investors.