Gene Munster of Deepwater Asset Management highlights concerns over Alphabet's (GOOGL, Financial) search business after Eddy Cue, Apple Inc.'s (AAPL) Senior Vice President, disclosed a decline in Safari browser's search usage. This has raised questions about Google's future revenues, suggesting Apple's potential shift from Google search dependency. Munster points out that traditional search results are being replaced by AI-driven results, posing challenges to Google's ad-reliant monetization model and facing competition from AI startups like OpenAI, Grok, and Perplexity.
Despite expectations of Google's search revenue growing by 9% in the second quarter, Munster forecasts only a 5% increase if the April decline in search traffic continues. Google's growth narrative has stagnated over the past two years, facing competition in the AI race despite its data, funding, and cloud infrastructure. Munster remarks that unless profitability significantly improves or market valuations increase, Google's stock might struggle to reach previous highs. Alphabet's shares fell 7.26% to $151.38, with a year-to-date decline of 20%, while Apple's shares decreased by 1.14% to $196.25.
