Google (GOOGL-1.57%) stock slid 7% on Wednesday after Apple’s (AAPL-0.39%) head of services, Eddy Cue, dropped a bombshell during antitrust testimony: Safari search volume had declined in April for the first time in over two decades.
Cue attributed the drop — which Google parent Alphabet disputes — to a growing user shift toward AI tools like ChatGPT, Perplexity, and Claude, and suggested Apple may eventually integrate one of them directly into Safari.
Investors, already nervous about AI’s disruption of search, didn’t take the news lightly and wiped roughly $155 billion off Alphabet’s market cap.
Cue made the remarks while testifying during the Department of Justice’s ongoing antitrust trial against Google. This trial centers on whether Google has maintained an illegal monopoly over search by paying billions to be the default engine on browsers like Safari. Cue appeared as a witness for the DOJ, and his comments about declining Safari search volume and potential AI alternatives were part of that testimony.
But according to analysts at Jeffries, the selloff may be overblown.
In a note released late Wednesday, titled “Don’t Rush to Count Out Google Search,” analysts from the investment bank argued that Safari’s shrinking share is a limited threat. While Apple’s browser holds 17% of global market share, Google Chrome commands 66%, giving Alphabet a much larger footprint regardless of what Apple does.
Meanwhile, daily active users of the Google app on iOS have climbed 15% year over year, undercutting fears of a broader user exodus.
Importantly, Google’s search business remains strong: Revenue grew 10% in Q1, even with tough comps and rising competition. Google’s AI Overviews — a feature that condenses information for search results using generative AI — are also monetized at roughly the same rate as traditional search, Jeffries noted, suggesting Alphabet is adapting its core product without sacrificing profitability. The analysts argued Google should be able to improve these economics over time, too.
As to valuation, Alphabet now trades at just 9.7 times forward EBITDA, the analysts pointed out — barely above its 10-year trough and well below long-term averages. The stock is down 20% so far this year, underperforming the Nasdaq’s 6% decline.
In short, while Apple may be exploring new partners, Google’s search dominance is far from over. “We believe the market reaction is excessive,” Jeffries conclued. “Reiterate Buy.”
While the memo represents just one group of analysts, Alphabet shares already look to be recovering. The stock was up more than 2% before Thursday’s market open.
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