Alphabet's Stock Takes $120 Billion Hit Amid AI Tools Impacting Google Search Traffic on Apple Devices, Eyes on Google I/O

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Updated May 9, 2025, 04:49 PM

Alphabet Inc.'s stock experienced a significant decline, dropping over 7% following reports of a decline in Google search traffic on Apple devices. This drop was attributed to users increasingly turning to AI tools like ChatGPT and Perplexity for search-like queries, as revealed by Apple's senior vice president of services, Eddy Cue, during testimony in the U.S. Department of Justice's antitrust trial against Google.

Despite these reports, Google issued a statement refuting claims of slowing search growth, asserting that it continues to see overall query growth in Search, including an increase in total queries coming from Apple's devices and platforms. Google emphasized that enhancements to its search capabilities, such as AI Overviews, Circle to Search, and AI Mode, are making it more useful for a broader range of queries.

The shift towards AI-driven search tools poses a structural threat to Google's traditional search monetization model, which relies heavily on ad clicks. Eddy Cue suggested that AI search providers could eventually replace standard search engines, indicating a potential shift in the search landscape. Apple receives about $20 billion annually from Google for making its search engine the default on its devices, and is exploring integrating AI search into Safari.

Alphabet's stock took a $120 billion hit as investors grappled with the implications of AI disrupting Google's search dominance. The company's upcoming Google I/O developer conference is seen as a critical event where Alphabet could provide clarity on its AI monetization strategies, including Gemini integrations, and its position in the evolving search market.

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