The search engine industry has long been dominated by Google, with its parent company Alphabet (GOOGL) commanding nearly 90% of global search traffic. However, recent developments suggest that this dominance may be under threat.

Apple (AAPL) is reportedly considering integrating AI-powered search engines like OpenAI’s ChatGPT, Perplexity, and Anthropic into its Safari browser. This move could significantly disrupt Google’s search market share, especially given that Apple receives over $20 billion annually from Google to maintain its default search engine status on Apple devices.

Eddy Cue, Apple’s senior vice president of services, testified in a U.S. antitrust trial that searches on Safari declined for the first time in April 2025, attributing this to the growing preference for AI-driven search tools. He further indicated that Apple is exploring alternatives to Google, including discussions with AI search providers like Perplexity and Anthropic.

In response, Alphabet maintains that overall search queries continue to grow, including those from Apple devices. The company is also enhancing its search capabilities with AI features like Gemini. Despite these efforts, the market reacted negatively, with Alphabet’s stock experiencing a significant decline.

As AI technologies continue to advance, traditional search engines may face increasing competition. Therefore, it may be prudent to reassess the long-term viability of holding Google stock in light of these developments.

About GOOGL Stock

Based in California, Google has evolved from a search engine leader into a top provider of cloud computing and AI services. Google Cloud now sits third worldwide, delivering everything from scalable servers and data analytics to easy‑to‑use machine‑learning tools. Central to its AI strategy is Vertex AI, a single platform where developers can quickly build, deploy, and manage models.

By investing in large language models, generative AI, and tailored solutions, whether for healthcare diagnostics or streamlining supply chains, Google Cloud uses its AI expertise to attract enterprise customers and boost profit margins. As rivals rush to catch up, Google’s tight AI integration across its cloud services gives it a clear edge in the coming digital transformation. The company has a market cap of around $1.87 trillion.

After peaking at an all‑time high near $208 in early February, Alphabet shares have plunged more than 25% amid tariff‑driven market turmoil. Year to date, GOOGL is down 19.4%, lagging the S&P 500 Index’s ($SPX) 3.8% decline over the same stretch.

This pullback has slashed Alphabet’s price-earnings multiple from 38x five years ago to just 17x today, creating a compelling entry point for long‑term investors.

GOOGL Delivered Strong Q1 Earnings Results

On April 24, Alphabet delivered another blowout quarter, powered by robust growth across its core advertising business and rapidly scaling cloud operations. 

In Q1 2025, the company reported revenue of $90.2 billion, up 12% year‑over‑year from $80.5 billion a year ago, comfortably topping the $89.12 billion consensus estimate. Search and other ad revenue climbed 9.8% to $50.7 billion, while YouTube advertising generated $8.93 billion, roughly flat sequentially and up 15% YOY. Traffic acquisition costs (TAC) rose to $13.75 billion, in line with expectations.

Net income surged to $34.54 billion, a 46% YOY increase from $23.66 billion. On an adjusted basis, EPS came in at $2.81, beating the $2.02 consensus and up from $1.89 a year ago. 

Turning to the balance sheet, free cash flow also remained healthy at $74.88 billion, while cash, cash equivalents, and marketable securities totaled $95 billion, providing ample liquidity to fund investments and share repurchases.

“Our strong start to 2025 underscores the resilience of our advertising platform and the rapid momentum in our cloud business,” said Sundar Pichai, CEO of Alphabet, on the Q1 earnings call. “We continue to invest aggressively in AI and infrastructure to drive long‑term growth.”

Capital deployment remained balanced as the board authorized an additional $70 billion share‑repurchase program, and capex is expected at $75 billion for 2025, primarily for data centers and AI infrastructure. 

Looking ahead, analysts currently model full‑year revenue of $389.5 billion and adjusted EPS of $9.43, reflecting continued strength in ads and accelerating Google Cloud margins. Google Cloud itself posted revenue of $12.26 billion, up 28% YOY.

Google Faces Major Challenges

Currently, Alphabet navigates two critical pressures. 

The first is the rapid ascent of rival large language models. The second is escalating antitrust scrutiny. ChatGPT’s user base, estimated between 400 million and 800 million, eyes 1 billion by year‑end, dwarfing Gemini’s 35 million daily actives. Yet Google’s AI advantage extends beyond a single app. Fifteen core products already run on Gemini models, and planned upgrades to Google Assistant across tablets, automobiles, and wearables should discreetly expand reach.

Concurrently, the U.S. Department of Justice has challenged Google’s default‑search agreements as unlawful. They target billions paid to Apple and others to embed Google Search and a two‑year exclusivity pact with Samsung that placed Gemini front and center on Android devices. The proposed final judgment would prohibit such arrangements and could mandate divestiture of Chrome or Android if competition does not improve.

The Bottom Line on GOOGL Stock 

Of 52 analysts covering the stock, the consensus rating is “Strong Buy.” The average 12‑month price target of $201 implies about 34% upside, and the high estimate of $240 suggests nearly 60% potential gains.

Alphabet’s dominant ad engine and fast‑growing cloud operations are now profitable and underpinned by AI. While Apple’s AI search experiments and mounting antitrust risks pose real headwinds, Google’s seamless AI integration across 15-plus products, $95 billion liquidity cushion, and $70 billion buyback authorization collectively reinforce its competitive moat. 

With analysts forecasting up to 34% upside and management guiding to mid‑teens revenue growth, Alphabet remains well‑positioned to navigate regulatory challenges and capitalize on the next wave of AI‑driven digital transformation.