On May 7, 2025, Alphabet's stock dropped significantly, by 7.5%, due to concerns over the potential disruption caused by AI-powered search engines, as voiced by Apple services head Eddy Cue. As search advertising constitutes 57% of Google's total revenue, this has raised alarms among investors about the company's vulnerability to emerging AI technologies. Meanwhile, a temporary pause in U.S.-China tariffs offers a glimmer of hope for tech firms like Google, potentially easing supply chain pressures. This juxtaposition of industry threat and political easing creates a mixed outlook for Google moving forward.
On Wednesday, May 7th, 2025, Alphabet's stock experienced a significant 7.5% drop following a Bloomberg report revealing Apple services head Eddy Cue's view that AI-powered search engines would eventually replace traditional ones like Google.
This market reaction highlights investor concerns about potential disruption to Google's core business model.
Investors seem to be worried that this heavy reliance on search advertising creates a significant vulnerability if AI search alternatives gain traction.
In addition, the U.S. and China recently agreed to a 90-day pause on tariffs, representing a significant de-escalation in trade tensions.
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